Inve US ▾
SBSBRA

Sabra Healthcare REIT (SBRA) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Real Estate· Aug 4, 2026

Source: earnings call transcript

Executive summary

Sabra Healthcare REIT Q2 FY26 — Strong SHOP Performance and Strategic Investments Drive Growth

Sabra Healthcare REIT delivered a strong Q2 FY26, marked by robust growth in its managed senior housing portfolio and strategic investment activity. The company significantly improved its leverage profile and reaffirmed its full-year earnings guidance, driven by operational improvements and a healthy acquisition pipeline. Management continues to focus on growing its SHOP exposure and selectively pursuing value-add opportunities with existing partners.

Highlights

5

  • Nearly $600 million in investments closed year-to-date, with an additional $100 million awarded and expected to close prior to year-end.

  • Same-store managed senior housing cash NOI grew 13.7% year-over-year.

  • Net debt to adjusted EBITDA ratio improved to 4.61x as of June 30, 2026, from 5.04x at March 31, 2026.

  • Normalized FFO per share increased 3% year-over-year to $0.38, and normalized AFFO per share increased 5% year-over-year to $0.40.

  • Total managed senior housing portfolio achieved sequential revenue growth of 9.6% and cash NOI growth of 14.4%, with margin expansion of 130 basis points.

Concerns

3

  • Triple-net senior housing experienced a drop in occupancy and coverage due to the transition of a high-performing asset to SHOP.

  • A $102.4 million provision for loan losses was recorded, primarily related to the discounted payoff of the RCA mortgage loan.

  • Interest and other income decreased to $5.8 million for the quarter, down from $10 million in the prior quarter.

Guidance & targets

CategoryTargetConfidence
Full-year 2026 Normalized FFO per share
$1.50 - $1.54
high materiality
High
Full-year 2026 Normalized AFFO per share
$1.58 - $1.62
high materiality
High
Full-year 2026 Same-store SHOP NOI growth
low to mid-teens
high materiality
High
Medicaid rates
around 2%
medium materiality
High
Medicare market basket
2.4%
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Managed Senior Housing (Total Portfolio)
Includes non-stabilized communities and joint venture assets at share. Demonstrates sequential improvement in operating results.
Cash NOI growth: 14.4% QoQMargin expansion: 130 bps QoQ
——9.6%—
Managed Senior Housing (Same-Store Portfolio)
Includes joint venture assets at share. Continued strong performance.
Occupancy: 88.2% (up 170 bps YoY)RevPOR increase: 6.6% YoYExpPOR increase: 4.1% YoYCash NOI growth: 13.7% YoY
—8.6%——
Managed Senior Housing (Same-Store, Domestic Portfolio)
Part of the overall same-store managed senior housing performance.
Occupancy increase: 170 bps YoY to 85.7%
————
Managed Senior Housing (Same-Store, Canadian Portfolio)
Marked the ninth consecutive quarter where occupancy was over 90%.
Occupancy increase: 160 bps YoY to 93.2%RevPOR increase: 5.9% YoY
—7.8%——
Triple-Net Portfolio
Cash rental income for the quarter, compared to $89.8 million in Q1. Includes benefits from Avamere rent reset and other portfolio initiatives.
$94.1M—4.8%—
Triple-Net Skilled Portfolio
Showed increased rent coverage.
Rent coverage: Increased
————
Triple-Net Senior Housing
Drop specifically due to the transition of a high-performing asset from triple net to SHOP. Without this, results would have been strong and flat.
Occupancy: DroppedCoverage: Dropped
————

SBRA operating KPIs by quarter

SBRA operating KPIs stated on its earnings calls, by fiscal quarter
KPI Mar 2026 Q1 FY26This call Jun 2026 Q2 FY26Change 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 and skilled nursing investments $100M Q2 FY26

Expected to close prior to year-end.

Managed senior housing investments actively pursuing $330M Q2 FY26

Actively pursuing, part of a pipeline exceeding $1 billion.

Deals & partnerships

Avamere Lease reset and transition of properties to Cascadia

Option exercised to reset rent. Transition is cooperative and planned, with Cascadia having a track record of turning around similar assets.

CommuniCare Sale of properties

Sale announced last quarter.

RCA Discounted payoff of mortgage loan

Discussed in July 21 business update. Improved balance sheet leverage.

Signature Behavioral Potential buyout of psych hospital assets

Signature Behavioral has been a reliable tenant for nine years and is interested in taking Sabra out of these assets. Sabra would be open to a compelling offer.

Risks & headwinds

Provision for loan losses Q2 FY26

$102.4M

Mitigation:Primarily related to the discounted payoff of the RCA mortgage loan, which is now behind the company, improving the balance sheet.

Decrease in interest and other income Q2 FY26

$4.2M sequential decrease (from $10M to $5.8M)

Mitigation:Primarily due to the discounted payoff of the RCA mortgage loan, which is now resolved.

Triple-net senior housing occupancy and coverage drop Q2 FY26

Drop in occupancy and coverage

Mitigation:Attributed specifically to the transition of a high-performing asset from triple net to SHOP; results would have been flat without this transition, implying a temporary and specific impact.

ExPOR growth spike Q2 FY26

4.1% YoY increase in ExpPOR

Mitigation:Attributed to a mix of factors including choppiness in repairs and maintenance and increases in incentive management fees (which indicate strong operator performance). Management expects ExpPOR growth to return to the 2% range in the next couple of quarters.

What to watch in Q3 FY26

Same-store SHOP NOI growth

Next quarter (Q3 FY26)
Current 14.1% (H1 average)
Target Low to mid-teens (reaffirmed guidance)

Why it matters

This is a core organic growth driver for the company, and management will revisit its full-year guidance with more visibility.

in terms of our SHOP guidance, we've reaffirmed that low to mid-teens growth rate that we put out earlier this year. As you noted, we've been right firmly within that range. And we continue to see opportunities for upside in that portfolio, but also at the same time, want to preserve that flexibility with how the rest of the year pans out. As we get further into the year and we have more visibility on what the second half is going to hold for us, it's something that we'll revisit.

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

Q&A highlights

How is management feeling about the low to mid-teens same-store SHOP guidance given H1 performance and peak leasing season?

Management reaffirmed the low to mid-teens guidance, noting opportunities for upside but preferring to preserve flexibility. They will revisit the guidance later in the year with more visibility.

“in terms of our SHOP guidance, we've reaffirmed that low to mid-teens growth rate that we put out earlier this year. As you noted, we've been right firmly within that range. And we continue to see opportunities for upside in that portfolio, but also at the same time, want to preserve that flexibility with how the rest of the year pans out.”

asked by Farrell Granath · answered by Rick Matros

2 min read 6 chapters

Detailed narrative

Investment Activity & Pipeline

Sabra closed $274.1 million in investments during Q2 FY26, including four managed senior housing properties and three skilled nursing communities. An additional $223 million was invested subsequent to quarter-end, bringing total year-to-date investments to $599 million at an estimated initial cash yield of 7.5%. The company has another $100 million of awarded managed senior housing and skilled nursing investments expected to close prior to year-end, and is actively pursuing $330 million in additional managed senior housing investments. The overall pipeline under review exceeds $1 billion, predominantly focused on SHOP assets.

Managed Senior Housing Performance

The total managed senior housing portfolio demonstrated strong sequential growth, with revenue up 9.6% and cash NOI up 14.4%, leading to a 130 basis point margin expansion. The same-store managed senior housing portfolio saw revenue growth of 8.6% year-over-year, with occupancy increasing 170 basis points to 88.2%. RevPOR rose 6.6% year-over-year, while ExpPOR increased 4.1%, contributing to a 13.7% year-over-year cash NOI growth. The Canadian portfolio notably maintained over 90% occupancy for the ninth consecutive quarter.

Triple-Net Portfolio & Proactive Management

The triple-net portfolio generated $94.1 million in cash rental income for the quarter. Sabra exercised an option to reset the rent with Avamere, increasing the annualized fixed cash rent to $48 million from $41 million in 2025, which added $3.2 million in rental revenue during Q2 (including $1.6 million of out-of-period revenues). An additional $1.6 million increase in cash rental income resulted from other portfolio initiatives like rent resets, lease amendments, and extensions, highlighting the benefits of diligent portfolio management.

Balance Sheet & Liquidity Improvement

Sabra significantly improved its leverage profile, with the net debt to adjusted EBITDA ratio decreasing to 4.61x as of June 30, 2026, from 5.04x at March 31, 2026, comfortably below its previous target of 5x. The company maintained strong liquidity, ending the quarter with approximately $1.3 billion, comprising $231.6 million in unrestricted cash and cash equivalents, $682.5 million of available borrowings under its credit facility, and $411.8 million related to shares outstanding under forward sale agreements from its ATM program.

Value-Add Investment Strategy

Sabra is strategically pursuing value-add opportunities within its SHOP pipeline, focusing on properties with approximately 80% occupancy. These opportunities, often with existing operator relationships, are expected to stabilize at around 9% yields and generate mid-teen IRRs, purchased well below replacement cost. Management emphasizes that these are not high-risk turnarounds but rather assets with a clear path to improved stability, leveraging proven operator capabilities.

G&A and Operational Efficiency

Normalized cash G&A for the quarter was $10.7 million, a modest decrease from the prior quarter. The company is actively investing in technology and AI initiatives to enhance efficiency and scalability across the organization, including investments, asset management, accounting, and finance. These efforts are expected to enable Sabra to manage growth with a more scalable platform, reducing the need for a proportional increase in headcount.

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