IRVINE, Calif., March 5, 2014 (GLOBE NEWSWIRE) -- Sabra Health Care REIT, Inc. ("Sabra," the "Company" or "we") (Nasdaq:SBRA) (Nasdaq:SBRAP) announced today that it has exercised its option to purchase and completed the acquisition of two skilled nursing facilities with a total of 254 licensed beds for $24.5 million (the "Chai Acquisition"). The facilities are located in Colorado Springs, Colorado and Fort Pierce, Florida and have 147 and 107 beds, respectively.
Sabra's option to buy these properties was obtained in connection with the $12.4 million mezzanine loan (the "Chai Mezzanine Loan") that Sabra originated in June 2013 with an affiliate of Chai Facilities Acquisition Company, LLC ("Chai"), the indirect owner of twelve skilled nursing facilities, with 1,689 licensed beds in seven states (the "Chai Portfolio"). The Chai Mezzanine Loan is secured by the borrower's equity interests in the entities that own the Chai Portfolio under which Sabra received an option to purchase up to $50.0 million of these facilities.
At closing, $5.8 million of the sales proceeds were used to repay a portion of the Chai Mezzanine Loan, resulting in Sabra funding an additional $18.7 million for the acquisition and leaving $6.6 million outstanding under the Chai Mezzanine Loan. Sabra continues to have an option to purchase up to an additional $25.5 million of the remaining ten properties in the Chai Portfolio.
Concurrently with the purchase, Sabra entered into a triple-net master lease agreement with affiliates of the seller. The lease has an initial term of 15 years with two 5-year renewal options and provides for an annual rent escalator equal to the greater of the change in the Consumer Price Index or 2.75%, resulting in annual lease revenues, determined in accordance with GAAP, of $2.8 million and an initial yield on cash rent of 9.5%.
Commenting on the Chai Acquisition, Rick Matros, CEO and Chairman, said, "When we put the Chai deal together last year, we were looking forward to the opportunity it afforded on a go forward basis. The Chai Acquisition expands our relationship with the Lyric team, operators of the Chai facilities, beyond the two facilities we currently own in Texas. They are a strong, highly experienced team. We look forward to continuing this mutually beneficial relationship."
ABOUT SABRA
Sabra Health Care REIT, Inc. (Nasdaq:SBRA) (Nasdaq:SBRAP), a Maryland corporation, operates as a self-administered, self-managed real estate investment trust (a "REIT") that, through its subsidiaries, owns and invests in real estate serving the healthcare industry. Sabra leases properties to tenants and operators throughout the United States. As of March 5, 2014, and after giving effect to the Chai Acquisition, our investment portfolio consisted of 129 real estate properties held for investment and leased to operators/tenants under triple-net lease agreements (consisting of (i) 98 skilled nursing/post-acute facilities, (ii) 29 senior housing facilities, and (iii) two acute care hospitals), 10 debt investments (consisting of (i) four mortgage loans, (ii) three construction loans, (iii) one mezzanine loan, and (iv) two pre-development loans) and two preferred equity investments. As of March 5, 2014, Sabra's real estate properties were located in 28 states and included 13,668 licensed beds.
FORWARD-LOOKING STATEMENTS SAFE HARBOR
This release contains "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. These statements may be identified, without limitation, by the use of "expects," "believes," "intends," "should" or comparable terms or the negative thereof. Forward-looking statements in this release include all statements regarding our expectations concerning the Chai Acquisition, including the future performance of these investments, as well as our expectations concerning our future relationship with Chai.
Our actual results may differ materially from those projected or contemplated by our forward-looking statements as a result of various factors, including, among others, the following: our dependence on Genesis HealthCare LLC ("Genesis"), the parent company of Sun Healthcare Group, Inc., until we are able to further diversify our portfolio; our dependence on the operating success of our tenants; changes in general economic conditions and volatility in financial and credit markets; the dependence of our tenants on reimbursement from governmental and other third-party payors; the significant amount of and our ability to service our indebtedness; covenants in our debt agreements that may restrict our ability to make acquisitions, incur additional indebtedness and refinance indebtedness on favorable terms; increases in market interest rates; our ability to raise capital through equity financings; the relatively illiquid nature of real estate investments; competitive conditions in our industry; the loss of key management personnel or other employees; the impact of litigation and rising insurance costs on the business of our tenants; uninsured or underinsured losses affecting our properties and the possibility of environmental compliance costs and liabilities; our ability to maintain our status as a REIT; compliance with REIT requirements and certain tax matters related to our status as a REIT; and other factors discussed from time to time in our news releases, public statements and/or filings with the Securities and Exchange Commission (the "SEC"), especially the "Risk Factors" sections of our Annual and Quarterly Reports on Forms 10-K and 10-Q. In addition, the Term Sheet is non-binding and is subject to the parties' negotiation of final terms. We assume no, and hereby disclaim any, obligation to update any of the foregoing or any other forward-looking statements as a result of new information or new or future developments, except as otherwise required by law.