SA Transcripts • Wed, Nov. 5
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- My regular readers know I use the declines caused by secondary offerings to pick up high-yield real estate investment trusts (REITs) at discounted prices.
- These secondary offerings can create temporary inefficiencies in pricing that can lead to some easy and profitable trading opportunities, which occur quite often in the market.
- This week's REIT special is an attractive high-yield play in the healthcare space that is off some 20% from recent highs and trading at a discount to peers.
Sabra Health Care's Industry, Diversification, Stability, Dividend, And Growth Look Attractive
- Sabra has been diversifying its customer base, its tenant base, and its variety of businesses to apparent success.
- Sabra's Q2 2014 results substantiate the profitability and growth of its businesses. Normalized FFO grew 39% and normalized AFFO grew 29% year over year. This is good growth.
- Sabra also pays a hefty 5.30% dividend. Read further for more details. You may find SBRA an interesting investment.
A Healthcare High Dividend Stock With 25%+ FFO Growth; Yielding Over 7%
- The aging of US baby boomers will continue to create increasing demand for healthcare facilities.
- Healthcare is the leading sector over the past year and year-to-date, but there are very few dividends paying over 6%.
- Sabra Healthcare offers income investors a well-covered 7%-plus preferred dividend yield.
A Prominent Sector Headwind Stifles The Growth Of Sabra Healthcare
- Sabra's rapid growth rate is slowing.
- Non-traded REIT money is compressing acquisition cap rates.
- Compressed spreads limit the volume of accretive growth available to Sabra.
Sabra Health Care REIT - Built On A Solid FoundationScott Low • Oct. 30, 2013
Mon, Nov. 3, 4:26 PM| Comment!
Sun, Nov. 2, 5:35 PM
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Fri, Oct. 31, 9:44 AM| Comment!
Thu, Oct. 30, 9:48 AM
- Deal number one is the acquisition of a portfolio of three transitional care facilities with a total of 171 beds in Oklahoma for $41M. Sabra (SBRA +0.4%) then entered into a triple-net master lease agreement with affiliates of the seller. The lease has an initial term of 10 years with an initial yield on cash rent of 8.5%.
- In deal number two, Sabra exercised an option to buy a 125-bed SNF in Austin, TX for $14M. The initial yield on cash rent is 9%.
- Source: Press Release
Wed, Oct. 15, 8:04 AM
- The Avalon Portfolio consists of four memory care facilities and a total of 115 beds in Texas for $25.9M. The initial yield on cash rent should be 7.75%.
- The Rosecastle Portfolio consists of three assisted living facilities in Florida for $27.6M. The tenant is planning on a turnaround of the portfolio. Following this, the cash rent yield is expected to be 9.7%.
- Tudor Heights is an assisted living-memory care facility in Baltimore for $5.6M.
- Sabra (NASDAQ:SBRA) also originates a $4.5M loan with BRP Celebration for the purchase of land in Celebration, FL for the planned development of a 225-unit senior housing facility. Sabra should have a purchase option upon completion and stabilization. The loan carries a 10% interest rate.
- Source: Press Release
Tue, Sep. 30, 7:56 AM
- Sabra (NASDAQ:SBRA) prices its 6M share secondary at $24.25 each. Excluding possible exercise of the 900K share greenshoe, the company expects net proceeds of $138.9M.
- Shares +1.25% to $24.55 premarket, after yesterday's 5.25% decline.
- Source: Press Release
- Previously: Sabra Health Care closes on purchase of 21 property portfolio; sells stock to finance
Mon, Sep. 29, 11:23 AM
- The 21 independent living facilities from Holiday Acquisition Holdings are located in 15 states and were purchased for $550M in cash. Concurrently, Sabra (SBRA -4.7%) enters into a triple-net master lease deal with subsidiaries of Holiday for management of the properties for 15 years (with two five-year renewal options). The lease is expected to generate an initial yield on cash rent of 5.5%.
- Sabra expects to close another $100M in sale/leaseback deals over the next 60 days.
- The company announces a 6M share secondary offering, with proceeds to be used to pay down amounts drawn ($560M) on its credit line to make the purchase.
Thu, Sep. 11, 1:21 PM
- Sabra Health Care REIT (SBRA +0.5%) is off the high, but still in the green after last night announcing a boost in its credit line to $650M from $375M, with an accordion feature allowing an increase to as much as $750M.
- Terms were improved to, with interest being either (at Sabra's option) Libor plus 2-2.6%, or a base rate plus 1-1.6% vs. the previous Libor plus 2.5-3.5% or base rate plus 1.5-2.5%.
- Source: Press Release
Wed, Jul. 30, 5:12 PM| Comment!
Fri, Jun. 27, 12:25 PM
- LTC properties (LTC +0.2%) is started with a Buy rating and $42 PT, with analyst Paul Morgan noting the company's focus on memory care facilities amid expectations the number of Alzheimer's cases should grow by 40% over the next decade.
- AVIV REIT (AVIV) is rated Hold with $30 PT. The company is exposed to risk from higher rates due to its long-term triple-net leases.
- BioMed Realty Trust (BMR) is initiated at Hold with $23 PT, with Morgan saying the valuation reflects the near-term positives.
- Smaller player Sabra Health Care REIT (SBRA +1.1%) rates a Buy with $31 PT, with Morgan noting a $60M investment for this company gets the same bang-per-buck as a $1B deal does for the sector's big three. He also sees synergies across the senior care landscape.
- Physicians Realty Trust (DOC +0.3%) is started a Buy with $16 price target, with Morgan taking note of $344M in acquisitions of outpatient medical offices over the past year and another $200M coming in H2 of 2014.
Mon, May. 5, 6:44 PM| Comment!
Mon, May. 5, 4:42 PM| Comment!
Mon, Mar. 31, 3:10 PM
- Already approved by the House and expected to be approved today by the Senate, the Doc Fix delays Medicare payment cuts - originally scheduled to take effect on April 1 - to doctors for a year.
- "The temporary patch is a near-term win for healthcare providers that have meaningful exposure to Medicare (i.e. Hospitals/SNFs) which should reduce reimbursement related risk in healthcare REIT stocks such as Medical Properties Trust (MPW), Omega Healthcare Investors (OHI), Sabra Healthcare (SBRA), Aviv REIT (AVIV) & HCP," says analyst Omotayo Okusanya. "That said, the temporary patch is just for a year, so conversation about a permanent solution is likely to re-emerge in 2015 Q1."
- Okusanya also notes HCP is reportedly readying mezzanine financing for Formation Capital's purchase of HC-One in the U.K. four about $900M. This would be the first deal for the company since Lauralee Martin came on as CEO, "and is likely to be a catalyst for the stock given the typically highly accretive nature of mezz financing to HCP’s earnings.”
Wed, Feb. 26, 5:37 PM| Comment!
Thu, Jan. 23, 4:36 PM| Comment!
Oct. 23, 2013, 6:36 PM
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