June 30, 2015
Mike Hargrave

SABRA Healthcare REIT buys 4 Post Acute SNFs at $345K/Bed…

SABRA Healthcare REIT (NYSE: SBRA) announced in a recent filing that they purchased 4 post-acute SNFs located in Maryland at a price/bed that rivals some hospital trades. They are purchasing 3 SNFs in the DC/MD suburbs (phase 1) comprising 472 beds for $172.5 million and one additional SNF in Hagerstown, MD (phase II) with 206 licensed beds for $58.8 million. The seller is G&L Realty of California and NMS Healthcare, a MD based SNF operator.

The price paid by SABRA equates to $345,133 per bed ($371,186 for phase I). The price, which is likely a record in the SNF sector, rivals some recent acute rehab hospital and long term acute care hospital trades. The average price/bed for acute rehab hospitals and LTACHs in the Revista database is $381K over the past year.

NMS is entering into a triple net lease with SABRA for Phase I and II for 15 years (with renewal options). The initial lease yield is 8.75% which produces initial annual rental revenues of $24.5 million. The rents are set to increase between 2.5% and 2.75% per year according to CPI.

SABRA says the properties specialize in transitional care and medically complex post-surgical, ventilator and dialysis patients.  Several of the facilities specialize in pulmonary care and NMS recently completed a new $14 million expansion on their Hagerstown facility which added a 56 bed pulmonary wing. A tour of each facility is located here.  Below are summary metrics on the transaction.

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SABRA-G&L Realty