U.S. Markets closed

Edited Transcript of SBRA earnings conference call or presentation 9-May-19 5:00pm GMT

Q1 2019 Sabra Health Care REIT Inc Earnings Call

IRVINE May 20, 2019 (Thomson StreetEvents) -- Edited Transcript of Sabra Health Care REIT Inc earnings conference call or presentation Thursday, May 9, 2019 at 5:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Harold W. Andrews

Sabra Health Care REIT, Inc. - Executive VP, CFO & Secretary

* Michael Costa

Sabra Health Care REIT, Inc. - EVP of Finance

* Richard K. Matros

Sabra Health Care REIT, Inc. - Chairman, President & CEO

* Talya Nevo-Hacohen

Sabra Health Care REIT, Inc. - Executive VP, CIO & Treasurer

================================================================================

Conference Call Participants

================================================================================

* Chad Christopher Vanacore

Stifel, Nicolaus & Company, Incorporated, Research Division - Senior Analyst

* Daniel Marc Bernstein

Capital One Securities, Inc., Research Division - Research Analyst

* Lukas Michael Hartwich

Green Street Advisors, LLC, Research Division - Senior Analyst

* Michael Anderson Griffin

Citigroup Inc, Research Division - Senior Associate

* Piljung Kim

BMO Capital Markets Equity Research - Senior Real Estate Analyst

* Richard Charles Anderson

SMBC Nikko Securities Inc., Research Division - Research Analyst

* Todd Jakobsen Stender

Wells Fargo Securities, LLC, Research Division - Director & Senior Analyst

* Trent Nathan Trujillo

Scotiabank Global Banking and Markets, Research Division - Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good day, ladies and gentlemen, and welcome to the Sabra Health Care REIT First Quarter 2019 Earnings Conference Call. This call is being recorded.

I would now like to turn the call over to Michael Costa, EVP Finance. Please go ahead, Mr. Costa.

--------------------------------------------------------------------------------

Michael Costa, Sabra Health Care REIT, Inc. - EVP of Finance [2]

--------------------------------------------------------------------------------

Thank you. Before we begin, I want to remind you that we will be making forward-looking statements in our comments and in response to your questions concerning our expectations regarding our acquisition, disposition and investment plans, our expectations regarding our tenants and operators and our expectations regarding our future financial position and results of operations.

These forward-looking statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially, including the risks listed in our Form 10-K for the year ended December 31, 2018, and in our Form 10-Q that was filed with the SEC yesterday as well as in our earnings press release included as Exhibit 99.1 to the Form 8-K we furnished to the SEC yesterday. We undertake no obligation to update our forward-looking statements to reflect subsequent events or circumstances, and you should not assume later in the quarter that the comments we make today are still valid.

In addition, references will be made during the call to non-GAAP financial results. Investors are encouraged to review these non-GAAP financial measures as well as the explanation and reconciliation of these measures to the comparable GAAP results included in the financials page of the Investors section of our website at www.sabrahealth.com. Our Form 10-Q, earnings release and supplement can also be accessed in the Investors section of our website.

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

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [3]

--------------------------------------------------------------------------------

Thanks, Mike, and thanks everybody for joining us this morning. It's been a quiet first month since we finished all of our restructuring initiatives and for that -- for us, it's a good thing to ease into a more normal operational environment.

As it pertains to guidance, we reaffirm our 2019 guidance. There were a couple of notes that presumed we'd have an issue hitting guidance due to the managed portfolio performance. That's not the case and Talya will be providing some details to give everybody comfort that we are comfortable with where the managed portfolio is going and why we are comfortable that will continue to meet guidance throughout 2019.

We are also focused now on the debt side of the balance sheet and Harold will get into that in a little bit more detail. But as most of you know, we've been looking at opportunities on the debt side for a little while and just waiting for sort of timing to work out for us. And we have that sort of in our sights now, so we expect to be engaged in some activity that will improve the balance sheet as well.

In terms of our acquisition pipeline, it's currently around $800 million, again, primarily Senior Housing, but we're starting to see some skilled deals. And for us, our focus will be on the deals that we can get done, given our current cost of capital, which are skilled deals, behavioral deals to the extent that we can find them. We've also been looking at the addiction space that we like. There aren't a whole lot of tried and true operators there, but there are some opportunities there that are small that would us give us at least the opportunity to get into it a little bit and learn more about it without taking any real risk. But it is a space that we expect to see grow, and certainly is a nice complement to what we're doing on the behavioral side in our portfolio.

In terms of our operating results. 7 of our top 10 are skilled operators, 5 showed improved coverage sequentially. So we're continuing to show better strength there. One is flat and that was more North American. So some of the declines we've seen, they've stopped those declines and we're seeing signs of things improving there. Then the one skilled operator that we have that came down some in coverage was a Signature Health at 1.25. Operationally, they're doing fine and we expect things to improve there. They've got a nice Medicaid rate increase coming in Kentucky, about 2.5% in July, and that's their biggest state with us. The primary issue for them has been, as most of you know, they had very high PLGL, which is what led to the restructuring initiatives that we and others undertook with them. And their experience in PLGL has come down dramatically. But it's only been about 8 months and so their actuarial results have been really swinging back and forth a little bit as it takes quite a bit of time for the actuaries to settle in with management and with the right accrual rate is for those liabilities. But nothing that we're concerned about. They're good operators, and we don't expect any issues there. And again some upside in the short term in terms of rate increase on the Medicaid side and then, of course, the market basket in October 1.

And relative to the market basket October 1, obviously that happens in conjunction with PDPM. That's a better market basket than we've received in years, so that's obviously a good thing for the space. In terms of PDPM, we continue to [receive] feedback from more of our operators relative to their preparation for PDPM. They continue to be bullish about it. And we've gotten really nothing but positive feedback and expectations relative to implementation of PDPM, with all of our skilled operators. The remainder of our same-store triple net skilled portfolio was uneventful, coming in at 1.29 EBITDA and 1.77 EBITDAR. Occupancy was essentially flat and skilled mix was slightly down, but consistent with the range it's been in and still a strong 39.1%. Skilled mix will always move around more than overall occupancy due to the dynamic nature of those patients. Our Senior Housing same-store triple net rent coverage and occupancy were essentially flat as well sequentially. Our Specialty Hospital same-store rent coverage was flat with occupancy slightly down, but in normally variance.

And with that, I'll turn the call over to Talya.

--------------------------------------------------------------------------------

Talya Nevo-Hacohen, Sabra Health Care REIT, Inc. - Executive VP, CIO & Treasurer [4]

--------------------------------------------------------------------------------

Thank you, Rick. I'll provide an update on our management portfolio. For the first quarter of 2019, approximately 12% of Sabra's cash net operating income was generated by our managed Senior Housing Communities. Approximately 84% of that relates to assets that are managed by Enlivant, 15% relates to retirement homes in 3 provinces in Canada, and the balance to 3 assisted living and memory care communities in the United States. Pro forma for the 21 Holiday Communities that were transitioned on April 1, annualized cash net operating income from our managed Senior Housing communities would be 16.9%.

On a same-store basis, which excludes the property in Canada that we sold in the fourth quarter of 2018, the managed portfolio had solid results in the first quarter compared with first quarter of 2018. Revenue increased by 3.9%, cash net operating income increased by 2.4% and revenue per occupied unit excluding the non-stabilized assets was up 4.6% despite flat occupancy. This points to our operators' ability to push rates in the current environment, coupled with a focus on expense control.

Let me give you some further detail on our joint venture and wholly owned managed portfolios. The Enlivant joint venture portfolio, 172 properties located in 18 states across the United States, of which Sabra owns 49%, showed steady improvement. Average occupancy for the quarter was 81.2%, 0.5% higher than the first quarter in 2018, when occupancy was 80.7%.

Revenue per occupied unit was $4,159, slightly below the previous quarter and 4% higher than the first quarter of 2018. Importantly, cash net operating income margin was 25.9% compared with 25.8% in the first quarter of 2018. If the Enlivant joint venture's cash net operating income remains flat for the rest of 2019, we would see 7% year-over-year cash NOI growth and that is before the impact of Enlivant's annual rent increase, which occurs on October 1st of each year.

As for the wholly owned portfolio, Sabra's wholly owned Enlivant portfolio of 11 communities continues to deliver steady results with an emphasis on controlling expenses following significant revenue gains throughout 2018. Average occupancy declined to 20 -- to 90.8% compared with 92.6% in the preceding quarter, reflective of lower moving volume during the winter months. This follows multiple sequential quarters of occupancy growth in 2018, which materially outpaced everyone's expectations.

Revenue per occupied unit rose to 5,363, holding nearly all of the rate gains implemented in the fourth quarter of 2018, and 7.6% higher in the first quarter of 2018. And cash net operating income was 16.2% higher on a year-over-year basis with a margin of 29.5%.

Sienna Senior Living manages 8 retirement homes in Ontario and British Columbia for Sabra. In the first quarter of 2019, the 8 properties managed by Sienna showed steady operating and financial results with 90.3% occupancy, down sequentially from 92.4%, but spot occupancy as of April 30 was 90.5%, so the trend is looking good. Portfolio occupancy has ranged from just under 90% up to 93% over the past year or so, and this occupancy dip is attributable to seasonality, coupled with renovation projects at 3 other properties in the residential areas.

REVPOR growth and expense controls yielded 39.4% cash net operating income margin compared to 38.2% in the preceding quarter, and cash NOI itself was flat on a sequential basis. Sienna continues to focus on revenue growth in the portfolio, which has a direct impact on net operating income margin at these occupancy levels, and we continue to invest additional capital into properties maintaining their appeal. We have one operator in our wholly owned managed portfolio who manages 2 non-stabilized communities and that creates some noise in our totals on the wholly owned managed portfolio. The dollars are small enough that it will not affect guidance, and we still expect to achieve 3% to 6% cash NOI growth in the wholly owned managed portfolio.

Subsequent to the end of the first quarter, Sabra's holiday portfolio consisting of 21 independent living communities located across the country was transitioned from our triple net portfolio to our managed portfolio. Holiday’s portfolio continues to have [importance] performance with occupancy as of March 31 at 91%, ranging between 79% to 100% across the portfolio.

I will now turn over the call to Harold Andrews, Sabra's Chief Financial Officer.

--------------------------------------------------------------------------------

Harold W. Andrews, Sabra Health Care REIT, Inc. - Executive VP, CFO & Secretary [5]

--------------------------------------------------------------------------------

Thank you, Talya. For the 3 months ended March 31, 2019, we recorded revenues and NOI of $136.8 million and $129.3 million, respectively, compared to $139.2 million and $136.6 million for the fourth quarter 2018. These decreases are attributed to the adoption of the new lease accounting standard, which among other things impacted the amount of revenues recorded during the quarter for certain assets in transition. However, this reduction is not expected to impact our full year financial performance communicated in our previously issued 2019 earning guidance.

FFO for the quarter was $77.2 million and on a normalized basis was $85.4 million or $0.48 per share. FFO was normalized to exclude $5.9 million related to the acceleration of above market lease intangibles, amortization, $1.2 million of loan loss reserves and $1.1 million of unreimbursed triple net operating expenses. This compares to normalized FFO of $90.2 million or $0.50 per share in the fourth quarter of 2018.

AFFO, which excludes from FFO merger and acquisition costs and certain noncash revenues and expenses, was $83.2 million, and on a normalized basis was $84.3 million or $0.47 per share. AFFO was normalized to exclude $1.1 million of unreimbursed triple net operating expenses. This compares to normalized AFFO of $83.8 million or $0.47 per share in the fourth quarter of 2018.

For the quarter, we recorded a net loss attributable to common stockholders of $77.7 million or $0.44 per share, which includes an impairment of real estate charge of $103.1 million primarily related to the assets previously leased to Senior Care Centers.

G&A costs for the quarter totaled $8.2 million and included the following: $2.8 million of stock-based compensation and $0.1 million of CCP-related transition costs. Our recurring cash G&A cost of $5.1 million were 3.9% of NOI for the quarter, in line with the prior quarter. We expect ongoing quarterly cash G&A cost to be approximately $5.5 million. Our interest expense for the quarter totaled $36.3 million compared to $37.2 million in the fourth quarter of 2018.

Included in interest expense in each quarter is $2.6 million of noncash interest. As of March 31, 2019, our weighted average interest rate excluding borrowings under the unsecured revolving credit facility and including our share of the Enlivant joint venture debt was 4.28%, consistent with the fourth quarter of 2018. Borrowings under the unsecured revolving credit facility bore interest at 3.74% at March 31, 2019, a decrease of 1 basis point from the fourth quarter of 2018.

As of March 31, 2019, we had 30 assets held-for-sale, which included the 28 Senior Care Center facilities that we sold on April 1 for gross proceeds of $282.5 million and 2 additional Skilled Nursing facilities. We did sell 3 Skilled Nursing facilities during the quarter for net proceeds of $6.9 million and recognized a $1.5 million net loss on sale. 2 of these assets were part of the CCP portfolio repositioning plan. We were in compliance with all of our debt covenants as of March 31, 2019, and continue to maintain a strong balance sheet with the following credit metrics, which include the impact of a Senior Care Center asset sales and the holiday conversion, which occurred -- both occurred on April 1, 2019.

Net debt to adjusted EBITDA, 5.64x. Net debt to adjusted EBITDA, including unconsolidated joint venture debt, 6.08x. Interest coverage, 4.19x. Fixed charge coverage, 4.06x. Total asset -- sorry, total debt to asset value, 48%; secured debt to asset value, 7%; and unencumbered asset value to unsecured debt, 233%.

As of March 31, 2019, we had total liquidity of $402.6 million, consisting of unrestricted cash and cash equivalents of $22.6 million and currently available funds under our revolving credit facility of $380 million. After considering the net proceeds from the Senior Care Centers sales and the holiday lease termination fee, which aggregated to $338.7 million, our pro forma liquidity increased to $741.3 million.

In addition, we set up an ATM program in the first quarter, whereby we can sell shares of our common stock having aggregate gross proceeds of up to $500 million. Subsequent to March 31, 2019, we sold 1.1 million shares of common stock under the ATM program at an average price of $19.57 per share, generating aggregate gross proceeds of $21.2 million, which further increased our liquidity and positively impacted our leverage.

Subject to market conditions, we expect to continue to use the ATM program to reduce our outstanding indebtedness and finance future investment in properties to achieve our stated deleveraging goals. With respect to the balance sheet. We are watching the bank and bond markets to take advantage of opportunities to extend our debt maturities, lower our cost of debt and increase our financial flexibility with current market covenants.

While I can't provide any specificity at this time, we hope to see some activity in these areas in the coming quarters. And to reiterate what Rick and Talya said, we reaffirm our full year guidance. And regarding our managed portfolio, if NOI stays flat for the balance of the year, we will hit about 7% growth in the Enlivant joint venture NOI, and will be about flat year-over-year on the owned portfolio. And keep in mind, the owned portfolio is so small in absolute dollars that just a couple of hundred thousand dollars per quarter increase in NOI puts us at the midpoint of our guidance range.

Finally, on May 8, 2019, the company announced that its Board of Directors declared a quarterly cash dividend of $0.45 per share. The dividend will be paid on May 31, 2019 to common stockholders of record on May 2, 2019. In terms of cash flows and the related funding of the dividend, we expect full year 2019 cash flows from operations to fully cover our 2019 dividends payments.

And with that, I'll open it up to Q&A.

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [6]

--------------------------------------------------------------------------------

Thanks, Harold.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) And our first question comes from Trent Trujillo from Scotiabank.

--------------------------------------------------------------------------------

Trent Nathan Trujillo, Scotiabank Global Banking and Markets, Research Division - Analyst [2]

--------------------------------------------------------------------------------

Looking at other components of guidance. It does include some dilution from equity raises, and you've mentioned the $500 million ATM program. On the last call, you mentioned you would be patient and wait until the stock was perhaps at an improved price. And it sounds like since that time, stock has been between $19 and $19.50. You executed within that range subsequent to the quarter end, but that's below where the stock was at the time of your last call. So how are you thinking about ATM usage going forward?

--------------------------------------------------------------------------------

Harold W. Andrews, Sabra Health Care REIT, Inc. - Executive VP, CFO & Secretary [3]

--------------------------------------------------------------------------------

Well. Thanks for the question. And the answer is, with respect to the ATM program and our deleveraging, certainly we'd love to see the stock price higher than it is, but when we think about issuing the equity to delever the impact on the stock price being $20 or $19.50, it's really immaterial. And so we made the decision in early April, actually it was at the end of March, to go ahead and issue a little bit of equity at the $19.57 price range. I wouldn't say definitively that we would issue more equity at a lower price. But I think we're going to be opportunistic and I think that the point I would like to take away is whether it's $19.50 or $21.50, we are very committed to deleveraging the balance sheet this year, and we'll do what it takes -- what it needs to take to get the leverage down below that 5.5x leverage level that we identified. And so again, we will be patient. We're not going to rush out and do it all at this level. But at the same time, we think it's prudent to go ahead and get started in that process and so you should expect to see us continue to use the ATM over time this year to get the leverage down. Does that answer your question?

--------------------------------------------------------------------------------

Trent Nathan Trujillo, Scotiabank Global Banking and Markets, Research Division - Analyst [4]

--------------------------------------------------------------------------------

That's very helpful. Yes, it does. I guess following up on, I guess, the underlying need for equity, there is the future purchase of the Enlivant JV that you don't already own, which you mentioned is a likely possibility in 2020. So I guess, with the stock where it is, who knows what's going to happen with the price and where you can issue stock. But are you thinking about other ways or structures or approaches besides purely raising equity to make that transaction work?

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [5]

--------------------------------------------------------------------------------

Yes. We are. And we've got a long way to go before we have to exercise that. But assuming we are kind of in the same place, there are the options that we've discussed internally. One option, for example, that may be a really good option for us is entering into a new JV and there is certainly not a shortage of interested parties in doing that with us. So that right now may be the best looking option. But again, we've got -- we have plenty of time on that.

--------------------------------------------------------------------------------

Trent Nathan Trujillo, Scotiabank Global Banking and Markets, Research Division - Analyst [6]

--------------------------------------------------------------------------------

Okay. And if I may, one more. It was very nice to see that 5 of your 7 operators showed improved coverage on the quarter. So I guess, what happened with those 5 operators that it improved? And what's happening with the rest of the portfolio since the aggregate coverage dropped? And I guess, specific to one of those operators, rent coverage for North American Health Care. I think on the last call, you mentioned in January, the coverage jumped back up to 1.25 after a blip. So what exactly happened that they still ended around 1.1?

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [7]

--------------------------------------------------------------------------------

Well. I think, on the operators that improved, which carried the majority of our NOI, I think, we've been pretty consistent all along that we expected to start to see improvement. So length of stay has flattened out, which has helped. I think they've done a good job on expense control. And we also [didn't think that preparation] for PDPM was going to be an issue that was going to cause any downturn. So I think it's consistent with kind of the trends that we've been seeing. On North American, they did have 2 to 3 months in the first quarter were good months, but remember that, that's a quarter in arrears in which they're reporting trailing 12, right? So you wouldn't see anything. But even with the first quarter, it's not going to make a big difference on trailing 12. I think we need a couple of more quarters. But January was a better month, March was even a better month. February is never a good month in our states because you got 28 days and fixed expenses. But we are seeing improvement there. So it's really a function of it being a quarter in arrears and we were just pleased at this point to see that the bleeding had kind of stopped as we expected it to and we're starting to seen an upturn.

So as for the rest of the portfolio, Signature's actually a big driver in that. It dropped a couple of basis points. It wasn't a big drop for the entire portfolio. So we're not seeing anything from a trend perspective that's causing us concerns. And I know I tend to look at a lot of these things differently than you all do. Just as an operator, I just expect things to move a little bit up and down. It's just the vagaries of the business, but we're not seeing anything that we're concerned about. And I think we're pretty close to some better times for this space, both in terms of market basket in October and PDPM. Although, I think it's also fair to say that we shouldn't expect that as soon as PDPM hit on October 1, you're going to see some upturn. I think it's going to take several months to realize that and we'll probably need to think about in 2020 as we present our numbers on a traditional basis, if we're starting to see positive impact from PDPM whether we start showing some things on a pro forma basis as well, to give the market a better sense of how PDPM is impacting our skilled operators.

--------------------------------------------------------------------------------

Operator [8]

--------------------------------------------------------------------------------

Our next question comes from Nick Joseph from Citi.

--------------------------------------------------------------------------------

Michael Anderson Griffin, Citigroup Inc, Research Division - Senior Associate [9]

--------------------------------------------------------------------------------

This is Michael Griffin on for Nick. So in terms of fundamentals regarding the SNFs, we see the occupancy is up a pretty decent amount year-over-year. Do you see trends like that continuing into the future? And sort of any color on that would be great.

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [10]

--------------------------------------------------------------------------------

Yes, we do. I mean you've got -- in the skilled space, you've almost got kind of a perfect storm coming. You've got declining supply, which is going to continue. You got an increasing demographic. And then even though most of the commentary that I think you all have seen about -- around PDPM has been the benefit being primarily on the expense side. I think that's a fair statement to make, because on the revenue side we do see opportunities there but it's just -- it's much harder to sort of quantify what that may be. So for example, if you're moving your focus as a skilled operator from being exclusively on short-term rehab because that's what the old system designed you to do and you're focused more on patients that have nursing complexities, those patients are going to tend to have a longer length of stay. So you actually could get some revenue benefit there.

If you have a long length of stay, then obviously you're going to have better occupancy. So you've got this convergence of demographic decline in supply and potential upside on the top line from PDPM. And we'll have to keep an eye on length of stay, because it's probably the only factor that we're going to able to look at in order for us to differentiate on how much of occupancy growth in the future is due to supply issues versus demographic versus PDPM. So I think that will be good stat for us to keep an eye on. Does that help?

--------------------------------------------------------------------------------

Michael Anderson Griffin, Citigroup Inc, Research Division - Senior Associate [11]

--------------------------------------------------------------------------------

Yes. That's helpful. I've just got one more quick one. Regarding concentration, you mentioned back in April that you decreased SNF the concentration portfolio down to about 60%, and meaningfully decreased it in Texas, which obviously isn't that friendly a state for SNFs. Sort of long-term picture, where would you like to see that SNF concentration be?

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [12]

--------------------------------------------------------------------------------

I think we'd like to get it a little bit lower, just to have a little more diversity. And if you assume -- if you just take where we are today and assume modest skilled acquisitions, then additionally assume the exercise of the joint venture option, you're close to 50%. So that's a pretty nice balance. Obviously, it's not just skilled and Senior Housing because you have behavioral in there as well, but I think we are getting low enough where we can take advantage of opportunities on the skilled side. So for example, because we -- between our development pipeline, which is Senior Housing, and Enlivant sometime next year, you know you've got more Senior Housing coming in. Obviously, our cost of capital isn't quite where we'd like it to be.

And frankly, even if they just were a few bucks higher, we still wouldn't be paying some of the prices that the PEs are paying for Senior Housing. So the -- our current cost of capital actually isn't a factor in our determination as to whether we'll do Senior Housing or not. We just think it's too expensive anyway. So we're in a good spot right now where our cost of capital does allow us to pursue skilled opportunities as well as behavioral, if we can find them. And without pushing our exposure back up to where it was, say, at the time that we closed the merger, it was 62% or 74%. That's just not going to happen. So with everything that we've gone through, I think we're in a pretty good spot to have a little bit more time for our cost of capital to recover and then focus on skilled deals without skewing that exposure too much.

--------------------------------------------------------------------------------

Operator [13]

--------------------------------------------------------------------------------

Our next question comes from Chad Vanacore from Stifel.

--------------------------------------------------------------------------------

Chad Christopher Vanacore, Stifel, Nicolaus & Company, Incorporated, Research Division - Senior Analyst [14]

--------------------------------------------------------------------------------

Just beginning the year, I think you teed up about $300 million of disposition and the majority of that was the Senior Care Centers sale, which took place. But you still got 30 assets held for sale. So what is the aggregate proceeds that are remaining from here to the end of the year that we should expect?

--------------------------------------------------------------------------------

Harold W. Andrews, Sabra Health Care REIT, Inc. - Executive VP, CFO & Secretary [15]

--------------------------------------------------------------------------------

Chad, it's Harold. First of all, the $300 million that we referenced in our guidance was in addition to the Senior Care Center sales. So we still have a lot of dispositions that will occur this year that are over and above that. A lot of them are toward the latter part of the year. So I think the -- I'm not sure if that answers your question, but there is still a lot to be done. And the few that we have held for sale today in addition to Senior Care Centers, those are ones that were far enough along the process that it's very, very close to closing on those transactions. We don't tend to put stuff in held for sale until we've got a contract that's executed and we're very close to closing because of the way the GAAP rules are required to qualify for held for sale. So you'll see more dispositions over the course of the next few quarters.

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [16]

--------------------------------------------------------------------------------

And those anticipated dispositions, Chad, weren't new dispositions or new issued. They were all contemplated in from of context with a merger. So there's nothing new that's occurred or tenants that all of a sudden had different issues with.

--------------------------------------------------------------------------------

Chad Christopher Vanacore, Stifel, Nicolaus & Company, Incorporated, Research Division - Senior Analyst [17]

--------------------------------------------------------------------------------

Okay. But Rick, beyond what you've already put in held for sale and what you expect for this year, beyond that, what -- if you had to circle a proportion of the portfolio that doesn't fit your strategy, I wonder, roughly what portion of your portfolio would you estimate that is, long term?

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [18]

--------------------------------------------------------------------------------

I don't think we have any tenants left that don't fit our strategy or have products within their operations that don't fit our strategy. And in fact we're seeing some different opportunities of strategy now in the behavioral space where we have a couple of operators who are interested in converting skilled facilities or unit facilities to behavioral use because that's a growing phase. So we really don't -- we don't [say]. There's always going to be a facility from time to time that you're going to want to divest because markets change, but when we look at our tenants, we just don't see anybody that we kind of want to move on.

--------------------------------------------------------------------------------

Chad Christopher Vanacore, Stifel, Nicolaus & Company, Incorporated, Research Division - Senior Analyst [19]

--------------------------------------------------------------------------------

On something like those behavioral opportunities, would that be more akin to CapEx funding to convert those over to proper facilities? Or what would that entail?

--------------------------------------------------------------------------------

Talya Nevo-Hacohen, Sabra Health Care REIT, Inc. - Executive VP, CIO & Treasurer [20]

--------------------------------------------------------------------------------

Chad, it's Talya. I think that's right. It really varies on the situation. If it's to a hospital type setting than there's more CapEx. If it's something that's not quite that [nominal distributor] reconfiguration potentially. So it really varies. But that's -- just a transition and CapEx is really the sort of nominal cost to us.

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [21]

--------------------------------------------------------------------------------

And in some cases, our operators may not need the CapEx from us, so it will just be situation-specific.

--------------------------------------------------------------------------------

Chad Christopher Vanacore, Stifel, Nicolaus & Company, Incorporated, Research Division - Senior Analyst [22]

--------------------------------------------------------------------------------

Got it. So that brings me to another question. Is now a better time to ramp up your new investments or to delever for Sabra?

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [23]

--------------------------------------------------------------------------------

Well, we are going to have plenty of proceeds available to do acquisitions, if we can find skilled acquisitions that are interesting to us, and I don't think -- I mean the question comes up, but we don't see -- we don't see a conflict between our ATM usage and delevering the balance sheet and getting some acquisitions done. We're not going to be out there doing $1 billion acquisitions. So we'd like to get some growth going, and I think it will be -- they'll probably be smaller deals that are more along the lines that you've seen from us in the past. So I think if you actually look at the numbers and the fact that they're not going to be huge numbers, you can do both. And we have all that out. We've looked at all that obviously in our forecast and believe that we can accommodate it.

--------------------------------------------------------------------------------

Operator [24]

--------------------------------------------------------------------------------

Our next question comes from John Kim from BMO Capital Markets.

--------------------------------------------------------------------------------

Piljung Kim, BMO Capital Markets Equity Research - Senior Real Estate Analyst [25]

--------------------------------------------------------------------------------

I just wanted to follow up on the guidance and the Senior Housing - Managed portfolio, because it sounds like what you're saying is that if you hit -- or if cash NOI is flat on your joint venture portfolio, you'll hit 7% percent growth for the year. And then also on your owned portfolio, if it's flat, it'll be a bit flat for the year. But just looking at your last few quarters as well as some of your peers, seems like first quarter is the high EBITDA margin point. So I'm just wondering what gives you confidence to either retain margins or just retain that level of NOI through the remainder of 2019.

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [26]

--------------------------------------------------------------------------------

Well, we don't view first quarter as being the high point. So with Enlivant, for example, historically their second and third quarters are their best quarters. So that hasn't been our experience.

--------------------------------------------------------------------------------

Piljung Kim, BMO Capital Markets Equity Research - Senior Real Estate Analyst [27]

--------------------------------------------------------------------------------

So 2018 was an anomaly?

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [28]

--------------------------------------------------------------------------------

Well, you had the flu that really limited, really impacted the second quarter pretty dramatically. We obviously hadn't had that experience this year. And because it impacted the second quarter so dramatically, it took a while to recover from that, so you saw it in the third quarter as well. We weren't the only ones who experienced that.

--------------------------------------------------------------------------------

Talya Nevo-Hacohen, Sabra Health Care REIT, Inc. - Executive VP, CIO & Treasurer [29]

--------------------------------------------------------------------------------

Right, and specifically Enlivant because they are the major contributor to our wholly owned portfolio -- to our managed portfolio both on the JV and the wholly owned, they do a fourth -- an annual rent increase in the fourth quarter, so actually fourth quarter tended be their strongest quarter.

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [30]

--------------------------------------------------------------------------------

They don't wait till January 1. They do it October 1, and that was 5% last year on the JV and 5.5% on the wholly owned.

--------------------------------------------------------------------------------

Piljung Kim, BMO Capital Markets Equity Research - Senior Real Estate Analyst [31]

--------------------------------------------------------------------------------

So just back of the envelope, we estimate you need to get about 10% growth for the remainder of the year in the joint venture assets, 7% in your wholly owned to reach the midpoint of your guidance. Is it fair to say that the midpoint is not likely and it's more of the lower end of the guidance that you're like to achieve?

--------------------------------------------------------------------------------

Harold W. Andrews, Sabra Health Care REIT, Inc. - Executive VP, CFO & Secretary [32]

--------------------------------------------------------------------------------

This is Harold. I'd have to see your math, because as we said, we don't need any growth in the joint venture to hit 7%, which is close to that midpoint. And on the owned portfolio, it's a slight growth in absolute dollars of about, call it, $250,000 a quarter to hit the midpoint, And so I'm not sure how you came up with that math, but that's our math.

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [33]

--------------------------------------------------------------------------------

We could spend time with you offline, John, because that's just not right.

--------------------------------------------------------------------------------

Piljung Kim, BMO Capital Markets Equity Research - Senior Real Estate Analyst [34]

--------------------------------------------------------------------------------

Okay. Can you confirm what the impact is on NOI from the Holiday portfolio transition?

--------------------------------------------------------------------------------

Harold W. Andrews, Sabra Health Care REIT, Inc. - Executive VP, CFO & Secretary [35]

--------------------------------------------------------------------------------

Yes. On NOI, for -- if you're just comparing the lease versus a comparison of what the NOI was for the first quarter, it's about $2 million for the quarter. But again, that doesn't -- that does not include benefits for paying down debts from the termination fee. But from a pure NOI perspective, it's about $2 million for the quarter.

--------------------------------------------------------------------------------

Piljung Kim, BMO Capital Markets Equity Research - Senior Real Estate Analyst [36]

--------------------------------------------------------------------------------

For the quarter, not annualized?

--------------------------------------------------------------------------------

Harold W. Andrews, Sabra Health Care REIT, Inc. - Executive VP, CFO & Secretary [37]

--------------------------------------------------------------------------------

Correct. On an annualized basis, the FFO impact was around $0.05 or $0.06, including the pay down of debt associated with the termination fee. And all that again, fully built into guidance and reflected in our expectations for the year.

--------------------------------------------------------------------------------

Piljung Kim, BMO Capital Markets Equity Research - Senior Real Estate Analyst [38]

--------------------------------------------------------------------------------

Last one from me. The impairment that you took with other charges as well was $103 million. I think last quarter, you provided guidance of $69 million. Just wondering what that difference was between the 2 numbers.

--------------------------------------------------------------------------------

Harold W. Andrews, Sabra Health Care REIT, Inc. - Executive VP, CFO & Secretary [39]

--------------------------------------------------------------------------------

Yes. The $69 million was specific to the assets being sold for Senior Care Centers. In our 10-Q, we disclosed $76 million, which included the other assets as well as some amount for assets that were being held. But we've made -- and I won't get into too much detail, but because we're now keeping 3 of the assets -- I'm sorry, selling 3 of the assets at the end of last quarter, we weren't exactly sure how many of those assets we were going to keep and how many we were going to sell. Now that we are pretty much committed to selling 3 of the 10, then there was some impairment for those assets as well. So you add that in plus the $10-or-so million for the other assets that we're selling that were not part of Senior Care Centers and that's the difference to get to the $100 million.

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [40]

--------------------------------------------------------------------------------

And the impairment, John, was specifically due to we have Houston facilities that got really damaged by the hurricane last year.

--------------------------------------------------------------------------------

Operator [41]

--------------------------------------------------------------------------------

Our next question comes from Rich Anderson from SMBC Nikko Group.

--------------------------------------------------------------------------------

Richard Charles Anderson, SMBC Nikko Securities Inc., Research Division - Research Analyst [42]

--------------------------------------------------------------------------------

I just wanted to get back to that Holiday question from John. So the $0.05 to $0.06 impact, inclusive of the $57 million that you collect in the second quarter, is that correct?

--------------------------------------------------------------------------------

Harold W. Andrews, Sabra Health Care REIT, Inc. - Executive VP, CFO & Secretary [43]

--------------------------------------------------------------------------------

It does not include the $57 million as it affects our income statement for the fee itself. What it includes is the impact of being able to pay down debt with that $57 million.

--------------------------------------------------------------------------------

Richard Charles Anderson, SMBC Nikko Securities Inc., Research Division - Research Analyst [44]

--------------------------------------------------------------------------------

All right. So the $0.05 to $0.06 is a good number next year, hopefully gets better than that, but that's sort of your base case going forward?

--------------------------------------------------------------------------------

Harold W. Andrews, Sabra Health Care REIT, Inc. - Executive VP, CFO & Secretary [45]

--------------------------------------------------------------------------------

That's correct. And again, built into our guidance numbers as well.

--------------------------------------------------------------------------------

Richard Charles Anderson, SMBC Nikko Securities Inc., Research Division - Research Analyst [46]

--------------------------------------------------------------------------------

Okay. Just a question on Signature. If I'm looking at this correctly, the coverage last quarter was 1.43x, 1.25x this quarter. I know you said you are not concerned. There's some noise, sort of, legal noise or whatever. But at what point do you get concerned when you see sort of a drop of that order of magnitude on a sequential basis?

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [47]

--------------------------------------------------------------------------------

So if the drop was due to operational performance, we would be concerned. But we're seeing steady operational performance there. The drop is specific to just taking longer than you would like for the actuarial to get their arms around what the reserve should actually be, what the run rate should actually be. So -- and the other concern would be if there was a change in their experience on those liabilities, then that would be concerning because that would obviously have a run rate effect on the income statement, but that's not the case either. So the drop off that we expected in terms of claims with how the environment changed in Kentucky last summer happened and their experience since then has been consistent with expectations. It's really just an actuarial issue.

--------------------------------------------------------------------------------

Richard Charles Anderson, SMBC Nikko Securities Inc., Research Division - Research Analyst [48]

--------------------------------------------------------------------------------

Okay. And then last one from me. Rick, you kind of spoke swimmingly a little bit about the Skilled Nursing business with the declining supply demographics in the right direction, PDPM, cleansing effect of that and all the other things. Suddenly, Skilled Nursing's starting to sound pretty cool asset class. And not to get ahead of ourselves, but is there a time in the future you think that an operating model, I guess, a SNOP model would apply realistically for Skilled Nursing? Or you think that, that's just too much to ask at this point?

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [49]

--------------------------------------------------------------------------------

I think it's probably a little bit too much to ask at this point. However, if you look at everything that CMS is doing, they're actually thinking really strategically, which I think historically hasn't necessarily been the case. Health care space is across the post acute spectrum and actually acute hospitals, too, always operated from a reimbursement perspective in silos. And all that's changing now as everything is going to case mix and with CMS openly discussing moving to a neutral site system, which we think would really be good for the skilled sector. So I think what you're talking about, when you get to a neutral site, then I think maybe yes, it is the possibility, but that's a ways down the line. I think just with the current dynamics that we see changing, probably not but yes, I can -- but maybe at that point. Remember you're taking on a lot of liability if you do the same thing with skilled as you're doing with Senior Housing.

So even if you have a model that was a lot more reliable and a neutral site environment, I think the big issue still that would prevent us from wanting to go there is on the liability side, because the difference between Skilled Nursing and Senior Housing from a liability perspective is that the database is -- the database of everybody in the skilled side called Nursing Home compare. So it allows the plaintiffs' attorneys to just troll, right? They can just go into that database and troll and pick on companies, pick on facilities and just target. And that isn't the case with Senior Housing, nor do I think it ever will be the case with Senior Housing. So even if you have a much more reliable model going forward that's fairly predictable, I don't see how you get away from being concerned about those liabilities. So as someone who spent a few decades in Skilled Nursing amongst other sectors, I just don't think I can get convinced.

--------------------------------------------------------------------------------

Richard Charles Anderson, SMBC Nikko Securities Inc., Research Division - Research Analyst [50]

--------------------------------------------------------------------------------

Okay. And one quick one for Harold, I'm sorry. On the debt -- on the deleveraging side, over 30% of your debt expiring in '21 and '22. Is there anything about -- I think a big chunk of '21 is your revolver. But is there anything about those chunks of debt that's out there that are unattainable at this point? Or is that something that you can go after with minimal penalties?

--------------------------------------------------------------------------------

Harold W. Andrews, Sabra Health Care REIT, Inc. - Executive VP, CFO & Secretary [51]

--------------------------------------------------------------------------------

Yes. We can absolutely go after the 2021 maturities with very minimal cost.

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [52]

--------------------------------------------------------------------------------

And Rich, I would say, we can't be that specific right now, but just stay tuned. We feel pretty good.

--------------------------------------------------------------------------------

Operator [53]

--------------------------------------------------------------------------------

(Operator Instructions) And our next question comes from Daniel Bernstein from Capital One.

--------------------------------------------------------------------------------

Daniel Marc Bernstein, Capital One Securities, Inc., Research Division - Research Analyst [54]

--------------------------------------------------------------------------------

I noticed on the wholly owned Enlivant properties, the 11 properties there, you've about 91% occupancy, 30% margins; it's very different on the JV. Is there any material difference between those assets and the reason why the JV assets can't get up to at least upper 80s, 90% occupancy and close to 30% margins over time?

--------------------------------------------------------------------------------

Talya Nevo-Hacohen, Sabra Health Care REIT, Inc. - Executive VP, CIO & Treasurer [55]

--------------------------------------------------------------------------------

There is nothing intrinsically different. We're just talking about different pools of assets. And so we're hopeful that what you just said, in fact, does come true and it's just a question of time.

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [56]

--------------------------------------------------------------------------------

The wholly owned, we're just further along in the turnaround phase. And plus they're looking at some assets within the JV that they're in the process of divesting, which will help the overall performance as well.

--------------------------------------------------------------------------------

Daniel Marc Bernstein, Capital One Securities, Inc., Research Division - Research Analyst [57]

--------------------------------------------------------------------------------

Okay. And then the assets that you're divesting the rest of this year, are you currently getting paid rent on those? Or is it something we would have to adjust in the model once you sell those assets? Or is the rent out of your revenue line at this point?

--------------------------------------------------------------------------------

Harold W. Andrews, Sabra Health Care REIT, Inc. - Executive VP, CFO & Secretary [58]

--------------------------------------------------------------------------------

Well, it's a number of assets, Dan. So it's probably a mix of both. I will tell you that all those dispositions are accounted for in our guidance numbers. So any lost rents from those has been dealt with in our full year guidance. But it's, like I said, upwards of $300 million over the course of the year. So it's a facility here, a facility there. It's kind of all over the Board. And frankly, a fair amount of it is toward the latter part of the year. And so you're going to have a pretty small impact. But I think if you want to chat more about it offline, I can kind of give you a little more detail...

--------------------------------------------------------------------------------

Daniel Marc Bernstein, Capital One Securities, Inc., Research Division - Research Analyst [59]

--------------------------------------------------------------------------------

That sounds fine. And then some of your peers had been talking about value-add opportunities. Earlier in this call, you talked

(technical difficulty)

you can make those accretive. So are you looking for value add? Are you seeing anything brought to you or you're interested in those?

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [60]

--------------------------------------------------------------------------------

Let me make one comment and then Talya may want to add on. We've always been interested in value add. I think we're trying to be a little sensitive to our investor base relative to all the restructuring we've done over that 18-month period. And now we've got that behind us. So I think if we do look at value-add opportunities, they will be relatively small. We don't want to announce anything that's going to drive a narrative again for the foreseeable future. And we don't want to announce anything that's going to require a lot of explanation. So we'll look for smaller opportunities like that. Talya?

--------------------------------------------------------------------------------

Talya Nevo-Hacohen, Sabra Health Care REIT, Inc. - Executive VP, CIO & Treasurer [61]

--------------------------------------------------------------------------------

I think that's right. And we have done them over time, as Rick said, here and there. They've always been small. And the key aspect of a value add is the time it takes to actually -- how much value can you add and how much time does it take to realize that value. But we're always open to looking at things. We just haven't seen any that felt like they were going to go well fairly quickly, so far.

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [62]

--------------------------------------------------------------------------------

Look, CCP was this value add and that's what's allowed us to get out from under what's happening to us with Genesis, just really controlling the state of our company. So that goes with the comments I made earlier about us wanting to be just more sensitive now to how we approach those things.

--------------------------------------------------------------------------------

Operator [63]

--------------------------------------------------------------------------------

Our next question comes from Lukas Hartwich from Green Street Advisors.

--------------------------------------------------------------------------------

Lukas Michael Hartwich, Green Street Advisors, LLC, Research Division - Senior Analyst [64]

--------------------------------------------------------------------------------

I just have one. Can you provide the underlying EBITDAR growth for the Holiday portfolio during the quarter?

--------------------------------------------------------------------------------

Talya Nevo-Hacohen, Sabra Health Care REIT, Inc. - Executive VP, CIO & Treasurer [65]

--------------------------------------------------------------------------------

You mean, quarter-over-quarter?

--------------------------------------------------------------------------------

Lukas Michael Hartwich, Green Street Advisors, LLC, Research Division - Senior Analyst [66]

--------------------------------------------------------------------------------

Year-over-year for the first quarter?

--------------------------------------------------------------------------------

Talya Nevo-Hacohen, Sabra Health Care REIT, Inc. - Executive VP, CIO & Treasurer [67]

--------------------------------------------------------------------------------

All right. I'd have to get that to you. I don't have it handy.

--------------------------------------------------------------------------------

Harold W. Andrews, Sabra Health Care REIT, Inc. - Executive VP, CFO & Secretary [68]

--------------------------------------------------------------------------------

I mean -- and you're talking about their operating performance and not what's in our finances, but their operating performance.

--------------------------------------------------------------------------------

Lukas Michael Hartwich, Green Street Advisors, LLC, Research Division - Senior Analyst [69]

--------------------------------------------------------------------------------

Yes, yes, because if you look at the other Holiday portfolios, it looks like independent livings had a better environment, and so you're starting to see NOI growth show up there. So I was just curious if we're also seeing that in your holiday portfolio?

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [70]

--------------------------------------------------------------------------------

I don't have that number.

--------------------------------------------------------------------------------

Talya Nevo-Hacohen, Sabra Health Care REIT, Inc. - Executive VP, CIO & Treasurer [71]

--------------------------------------------------------------------------------

We can get it to you.

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [72]

--------------------------------------------------------------------------------

We'll get back to you with that number. And our portfolio, these are all IL, so.

--------------------------------------------------------------------------------

Operator [73]

--------------------------------------------------------------------------------

Our next question comes from Todd Stender from Wells Fargo.

--------------------------------------------------------------------------------

Todd Jakobsen Stender, Wells Fargo Securities, LLC, Research Division - Director & Senior Analyst [74]

--------------------------------------------------------------------------------

Just to kind of stick with Holiday for a second. What was the EBITDAR coverage at Q1? I know you guys used to list it in your supplemental, but just to get a sense of the starting point, I guess, for their now managed direction.

--------------------------------------------------------------------------------

Harold W. Andrews, Sabra Health Care REIT, Inc. - Executive VP, CFO & Secretary [75]

--------------------------------------------------------------------------------

Yes. It's been pretty flat. It's still around 0.9 on an EBITDAR basis, and that's not really much change from prior quarters. So it's been pretty flat.

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [76]

--------------------------------------------------------------------------------

It was there for a long time, Todd.

--------------------------------------------------------------------------------

Todd Jakobsen Stender, Wells Fargo Securities, LLC, Research Division - Director & Senior Analyst [77]

--------------------------------------------------------------------------------

Okay. And then any -- how about the CapEx commitment for just for Holiday? And any comments that there is deferred maintenance and maybe now you'll be responsible for that.

--------------------------------------------------------------------------------

Talya Nevo-Hacohen, Sabra Health Care REIT, Inc. - Executive VP, CIO & Treasurer [78]

--------------------------------------------------------------------------------

We've always been involved in capital projects and discussions along those lines. I'm happy to get back to what the capital commitment is, but there is nothing unusual that's occurring there. It's more -- it's status quo.

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [79]

--------------------------------------------------------------------------------

Yes. Todd, I'd say the way I would characterize it is, they don't have maintenance issues in our portfolio. The question is how much more can you do to pretty the facilities up and make them a little bit more competitive. But those won't require material dollars.

--------------------------------------------------------------------------------

Todd Jakobsen Stender, Wells Fargo Securities, LLC, Research Division - Director & Senior Analyst [80]

--------------------------------------------------------------------------------

Okay. And then for Harold. Any -- have you disclosed or could you disclose your line balance? It was on the high side as of Q1, but you had some senior care disposition proceeds already, so maybe just looking at a $600 million line balance. What is it now?

--------------------------------------------------------------------------------

Harold W. Andrews, Sabra Health Care REIT, Inc. - Executive VP, CFO & Secretary [81]

--------------------------------------------------------------------------------

Yes, to your point, it was paid down by the proceeds from Holiday, the $57 million and the $282 million. So when I gave you that pro forma liquidity number of -- let me just grab it again -- $741 million, that means our line -- the liquidity on the revolver is somewhere around $720 million. So that means $280 million outstanding on the line today.

--------------------------------------------------------------------------------

Operator [82]

--------------------------------------------------------------------------------

And I am showing no further questions from our phone lines. I'd now like to turn the conference back over to Rick Matros for any closing remarks.

--------------------------------------------------------------------------------

Richard K. Matros, Sabra Health Care REIT, Inc. - Chairman, President & CEO [83]

--------------------------------------------------------------------------------

Thanks, everybody, for your time. We're available for any follow-up and we'll follow up with a couple of you on the items that were specified. And just to make the note again, we are comfortable with guidance. Thanks. Have a good day.

--------------------------------------------------------------------------------

Operator [84]

--------------------------------------------------------------------------------

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone, have a wonderful day.