IRVINE, Calif., April 3, 2012 (GLOBE NEWSWIRE) -- Sabra Health Care REIT, Inc. ("Sabra," the "Company" or "we") (Nasdaq:SBRA) today announced the acquisition of two skilled nursing facilities and the funding of a mezzanine loan investment.
Pennsylvania Subacute Portfolio
On March 30, 2012, we closed the purchase of two specialized skilled nursing facilities (the "Pennsylvania Subacute Portfolio") in a sale-leaseback transaction with affiliates of the sellers for $29.9 million. Each facility has 60 licensed beds and one facility was most recently renovated in 1990, while the other facility was most recently renovated in 2008. In connection with the acquisition, we, through an indirect wholly owned subsidiary, entered into a single 15-year triple-net master lease agreement with the sellers with two five-year renewal options. The Pennsylvania Subacute Portfolio lease provides for annual rent escalators equal to the greater of the change in the Consumer Price Index or 2.5%, resulting in annual lease revenues determined in accordance with GAAP of $3.4 million and an initial yield on cash rent of 9.50%. The purchase price was funded with available cash.
Commenting on the Pennsylvania Subacute Portfolio acquisition, Rick Matros, CEO and Chairman, said, "These two subacute facilities are unique in a number of ways. They are skilled nursing facilities in name only. These are subacute ventilator facilities. The population in one is primarily young adult while the other is middle aged to elderly. They do a negligible amount of Medicare business and therefore the CMS final rule did not impact this business. The primary source of revenue is state-funded Medicaid and Managed Care through specialized rates for ventilator and other complex conditions. States are recognizing that there needs to be an alternative to the acute-care setting for these patients and the cost is appreciably less in the skilled nursing setting than in any other institutional setting. Most importantly, this management team takes a programmatic approach to provide quality outcomes to the population it serves which is what truly is important to both the state and the managed care companies. These facilities also treat other diseases such as MS and ACLS although the patient population consists primarily of ventilator dependent individuals. Now that Medicare has increased reimbursement for these types of patients these facilities may see increased Medicare revenues over time. We are pleased to be associated with such a forward looking management team. Their business model is ahead of the curve but clearly where the industry is headed.