Sabra Health Care REIT (SBRA) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Real Estate· Apr 30, 2026

Source: earnings call transcript

Executive summary

Sabra Health Care REIT Q1 FY26 — Strong SHOP Performance and Robust Investment Pipeline

Sabra Health Care REIT delivered a strong first quarter, driven by robust performance in its managed senior housing portfolio and a significant investment pipeline. The company reaffirmed its full-year guidance, with plans to revisit it in Q2, reflecting confidence in ongoing positive trends and a strategic focus on expanding its SHOP exposure. AI initiatives are being deployed to enhance operational efficiency and scalability across the platform.

Highlights

Normalized FFO per share increased 9% year-over-year to $0.38.
Normalized AFFO per share increased 5% year-over-year to $0.39.
Same-store managed senior housing portfolio cash NOI grew 14.4% year-over-year.
Total managed senior housing portfolio NOI increased 62% year-over-year due to asset additions.
Year-to-date closed or awarded investments reached $400 million, with an estimated initial cash yield of 8%.

Concerns

Leverage ticked up slightly to 5.04x net debt to adjusted EBITDA.
Interest and other income decreased to $10 million from $10.6 million last quarter due to paydowns and lower cash interest.
G&A increased to $11 million from $10.6 million last quarter, primarily due to an operator conference.

Guidance & targets

Category	Target	Timeline	Confidence
Earnings Guidance	Affirmed previously issued 2026 earnings guidance high materiality	FY26	High
Same-Store SHOP NOI Growth	low to mid-teen high materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Total Managed Senior Housing Portfolio Includes non-stabilized communities and joint venture assets at share. Demonstrates sequential improvement in operating results. Cash NOI growth: 9.5% QoQMargin expansion: 60 bps QoQAssets added: 21 YoYTotal managed senior housing NOI increase: 62% YoY	—	—	7.2%	—
Same-Store Managed Senior Housing Portfolio Includes joint venture assets at share. Strong performance with occupancy and RevPOR growth outpacing expense growth. Occupancy: 88.4% (up 280 bps YoY)RevPOR increase: 4.6% YoYExpPOR increase: 1.8% YoYCash NOI growth: 14.4% YoY	—	7.9%	—	—
Same-Store Managed Senior Housing Portfolio - Canada Marked eighth consecutive quarter with occupancy over 90%. Considered almost effectively full. Occupancy: 93.4% (up 270 bps YoY)RevPOR increase: 6.5% YoY	—	9.6%	—	—
Same-Store Managed Senior Housing Portfolio - U.S. Domestic portfolio showed strong occupancy growth. Occupancy: 85.6% (up 280 bps YoY)	—	—	—	—
Net Lease Senior Housing Portfolio Continues to perform well. Rent coverage: Strong	—	—	—	—
Triple Net Portfolio Cash NOI increased primarily due to annual rent escalators and increased collections from certain cash basis tenants.	—	—	—	$2.2M increase QoQ
Skilled Nursing Strong performance with growing rent coverages and occupancy. Rent coverages: Growing, hit new highsOccupancy: Continued growth	—	—	—	—
Behavioral Strong performance with growing rent coverages. Rent coverages: Hit new highs	—	—	—	—

SBRA operating KPIs by quarter

SBRA operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Occupancy rate Same-store managed senior housing	88.4% First quarter occupancy in our same-store portfolio was up 280 basis points to 88.4% year-over-year. Source: earnings call transcript	88.2% Second quarter occupancy in our same-store portfolio was up 170 basis points to 88.2% year-over-year. Source: earnings call transcript	-0.2 pt
Occupancy rate Domestic same-store managed senior housing	85.6% Notably, our domestic portfolio occupancy increased 280 basis points to 85.6% during that period, while our Canadian portfolio grew 270 basis points to 93.4% in the same period, marking the eighth consecutive quarter where occupancy was over 90%. Source: earnings call transcript	85.7% Notably, our domestic portfolio occupancy increased 170 basis points to 85.7% during that period, while our Canadian portfolio grew 160 basis points to 93.2% in the same period, marking the ninth consecutive quarter where occupancy was over 90%. Source: earnings call transcript	+0.1 pt
Occupancy rate Canada same-store managed senior housing	93.4% Notably, our domestic portfolio occupancy increased 280 basis points to 85.6% during that period, while our Canadian portfolio grew 270 basis points to 93.4% in the same period, marking the eighth consecutive quarter where occupancy was over 90%. Source: earnings call transcript	93.2% Notably, our domestic portfolio occupancy increased 170 basis points to 85.7% during that period, while our Canadian portfolio grew 160 basis points to 93.2% in the same period, marking the ninth consecutive quarter where occupancy was over 90%. Source: earnings call transcript	-0.2 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Awarded Managed Senior Housing Investments $107M Q1 FY26

Most expected to close in Q2 FY26.

Awarded Skilled Nursing Investments $94M Q1 FY26

Most expected to close in Q2 FY26.

Actively Pursued Managed Senior Housing Investments $690M Q1 FY26

Includes opportunities where initial LOI has been submitted; expected to close on a fair number.

Holiday Assets for Sale 3 assets Q1 FY26

Assets from the transitioned Holiday portfolio, currently in the process of being sold.

Landmark Behavioral Health Assets for Sale 3 assets Q1 FY26

In the process of being sold, in addition to those already transacted.

Deals & partnerships

Multiple Addition of properties to managed senior housing portfolio, skilled nursing community, and preferred equity investment in senior housing development. $102M

3 properties added to managed senior housing, 1 skilled nursing community, and a preferred equity investment in a senior housing development.

Multiple Addition of properties to managed senior housing portfolio and redevelopment of a senior housing community. $104.1M

2 properties added to managed senior housing portfolio and the redevelopment of a senior housing community, subsequent to quarter end.

Communicare Sale of skilled nursing facilities. $79.4M

Disposition of 3 skilled nursing facilities in Maryland leased to Communicare, subsequent to quarter end. Classified as held for sale as of March 31, 2026.

Landmark team and others Sale of Landmark behavioral health assets.

Working with Landmark for an exit; some assets sold to the Landmark team, others to third parties. An additional 3 assets are in the process of being sold.

Risks & headwinds

Leverage increase Q1 FY26

Net debt to adjusted EBITDA ratio ticked up slightly to 5.04x

Mitigation:Still on current target; will continue to assess opportunities to reduce leverage over time.

Competitive investment environment Near-term

Hard to predict execution rate on $690M pipeline due to competitive environment

Mitigation:Focus on off-market deals and existing relationships; leveraging platform scalability with AI initiatives.

Cap rate pressure Ongoing

Most market opportunities in 7% range, compared to 8% yield on recent closed deals

Mitigation:Focus on secondary markets where cap rate compression is less severe; pursuing value-add opportunities with lower initial yields but higher IRRs.

Skilled nursing transaction market competition Ongoing

Private groups tend to pay up more, making it hard for REITs to compete

Mitigation:Focus on off-market deals with direct relationships; maintaining a strong triple net skilled nursing portfolio for balance.

Potential missteps by new SHOP entrants Ongoing

Qualitative concern about others jumping into SHOP without adequate infrastructure

Mitigation:Sabra has long experience and an operator-centric asset management team, plus AI initiatives for scalability.

Landmark regulatory issues and incidents Past, leading to current divestiture

Unfortunate incidents with resident deaths in Indiana led to shutdown by regulator

Mitigation:Exiting Landmark assets to mitigate further exposure.

What to watch in Q2 FY26

Earnings Guidance Re-evaluation

Q2 FY26

Current Affirmed 2026 guidance

Target Revised 2026 guidance (up/down/maintained)

Why it matters

Management indicated they would revisit guidance in Q2, which could signal a change in full-year expectations based on current trends.

We're affirming guidance, but we will be revisiting guidance in Q2 given all the current trends.

Find out whether SBRA delivers this. Inve re-checks your case every morning.

Q&A highlights

Why is guidance being held conservative despite strong performance, and what is the historical execution rate on the $690 million actively pursued pipeline?

Management stated they are typically conservative early in the year and will re-evaluate guidance in Q2. The $200 million awarded investments are expected to close, but historical execution rates on the $690 million actively pursued pipeline are hard to predict due to unprecedented volume, though a significant portion is expected to close.

“Yes. The volume is so high, John, there really hasn't been a precedent for this in terms of trying to be a little bit more predictive about what the percentage of deals we'll close on. But it will be a good enough percentage that, as I said in my opening remarks, we'll exceed pretty materially how much we did last year.”

asked by William John Kilichowski · answered by Rick Matros

2 min read 6 chapters

Detailed narrative

Investment Pipeline and Strategy

Sabra's deal flow remains robust, with $400 million in closed or awarded investments year-to-date, already exceeding 2025's total. The company has an additional $690 million of managed senior housing investments actively being pursued. The focus remains on off-market deals, particularly in unskilled and SHOP segments, with an estimated initial cash yield of 8% on recent investments. The company is geographically agnostic but primarily targets secondary markets, where cap rate compression is less severe.

Managed Senior Housing Portfolio Performance

The total managed senior housing portfolio saw sequential revenue growth of 7.2% and cash NOI growth of 9.5%, with margin expansion of 60 basis points. The same-store managed senior housing portfolio achieved 14.4% year-over-year cash NOI growth, driven by 7.9% revenue growth and only 1.8% expense growth. Occupancy in the same-store portfolio increased 280 basis points year-over-year to 88.4%, with the Canadian portfolio reaching 93.4% and the domestic portfolio 85.6%.

AI and Automation Initiatives

Sabra is implementing AI and automation initiatives to streamline back-office workflows, data processing, and analysis, particularly within its SHOP portfolio. The goal is to enhance scalability, improve decision-making, and provide deeper operating insights to operators. Clinical pilots leveraging AI for medical records and fall detection are also ongoing at the facility level, aiming to improve efficiency and resident care.

Balance Sheet and Capital Allocation

The company's net debt to adjusted EBITDA ratio was 5.04x, in line with its target. Sabra utilized its ATM program, issuing $128 million on a forward basis at an average price of $20.19 per share, bringing total outstanding forward contracts to $451 million. Liquidity stands at $1.2 billion, including cash, revolver capacity, and forward sales agreements. A quarterly cash dividend of $0.30 per share was declared, representing a 77% payout of normalized AFFO per share.

Regulatory Environment and Reimbursement

The regulatory environment is stable, with the Medicare market basket proposal and expected Medicaid rates falling within expectations. Management noted a normalization of rates post-pandemic, reverting to historical norms. The company is bullish on value-based care, working with operators to embrace these models for both skilled nursing and senior living, which are seen as opportunities for increased referrals and improved outcomes.

Behavioral Health and RCA Loan Update

Sabra is exiting its Landmark behavioral health assets, having secured attractive pricing for some sales and actively selling others. This follows regulatory issues and unfortunate incidents at Landmark facilities. Discussions regarding the RCA loan are progressing constructively, with a potential announcement before the Q2 call, reflecting Deerfield's continued belief in the portfolio.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.