Sabra Healthcare REIT NASDAQ: SBRA reported second-quarter 2026 normalized funds from operations of $0.38 per share and normalized adjusted funds from operations of $0.40 per share, with management reaffirming the higher full-year earnings outlook it issued in a July business update.
Normalized FFO per share was unchanged from the first quarter and up 3% from a year earlier, while normalized AFFO per share increased from $0.39 in the first quarter and rose 5% year over year. Chief Financial Officer Michael Lourenco Costa said the midpoint of Sabra’s 2026 guidance implies approximately 7% year-over-year growth in normalized FFO per share and 8% growth in normalized AFFO per share.
Investment Activity Expands Managed Senior Housing Portfolio
Chief Executive Officer Rick Matros said Sabra closed approximately $600 million of investments, including $100 million in skilled nursing investments, and was in the process of closing another $100 million in senior housing operating portfolio, or SHOP, investments.
Chief Investment Officer Darrin Smith said Sabra invested $274.1 million during the second quarter, adding four managed senior housing properties, three skilled nursing communities, a senior housing redevelopment and the operations of one senior housing property converted from a triple-net lease to managed senior housing. Subsequent to quarter-end, the company invested another $223 million in seven managed senior housing properties.
Year-to-date investments totaled roughly $599 million at an estimated initial cash yield of 7.5%, Smith said. Sabra also had approximately $100 million of awarded managed senior housing and skilled nursing investments expected to close before year-end, bringing closed and awarded investments to about $700 million. The company was pursuing an additional $330 million of managed senior housing investments.
Management described the broader pipeline as exceeding $1 billion and said it was almost entirely SHOP-focused. Matros said most opportunities were single-asset transactions, though the pipeline includes several smaller portfolios of three to five assets.
Sabra added 21 managed senior housing assets over the past year, representing a nearly 24% increase in asset count and a nearly 76% increase in total managed senior housing net operating income, according to Smith.
SHOP Operations Show Occupancy and NOI Growth
Sabra’s total managed senior housing portfolio, including non-stabilized communities and joint-venture assets at its share, posted 9.6% sequential revenue growth and 14.4% cash NOI growth during the quarter. Cash NOI margin expanded 130 basis points sequentially.
In the same-store managed senior housing portfolio, revenue increased 8.6% from a year earlier, occupancy rose 170 basis points to 88.2%, and revenue per available room, or RevPAR, increased 6.6%. Expense per available room increased 4.1%, resulting in 13.7% year-over-year cash NOI growth.
- Domestic same-store occupancy increased 170 basis points to 85.7%.
- Canadian same-store occupancy rose 160 basis points to 93.2%, marking the ninth consecutive quarter above 90%.
- Canadian same-store revenue increased 7.8% year over year, while Canadian RevPAR rose 5.9%.
Costa said Sabra reaffirmed its expectation for low- to mid-teens same-store SHOP NOI growth in 2026. He said the company continued to see potential upside but wanted to retain flexibility until it had greater visibility into the second half of the year.
Management attributed RevPAR growth to continued occupancy gains, operating efficiency and some pricing power. Costa said the company expects expense growth, excluding periodic items such as repairs and maintenance, to return toward the roughly 2% level seen in recent quarters.
Sabra is also evaluating selected value-add SHOP investments. Costa described two opportunities encompassing six properties and approximately 713 assisted living and memory care units, with average asset age of five years. The properties are about 80% occupied, with five in Atlanta suburban markets and one in Denver. He said the opportunities could generate an expected first-year yield of about 6%, stabilized yields around 9% and internal rates of return in the teens, with assets acquired below replacement cost.
Matros said Sabra’s value-add strategy is focused on assets around 80% occupied rather than properties at substantially lower occupancy levels. The company is working with existing operating partners that have demonstrated an ability to improve similar assets, he said.
Triple-Net Rent Initiatives Support Results
Total cash NOI increased to $144.3 million in the second quarter from $138.7 million in the first quarter. Managed senior housing cash NOI rose to $44.6 million from $39 million, reflecting recent investments as well as same-store occupancy, rate and margin gains.
Cash rental income from the triple-net portfolio increased to $94.1 million from $89.8 million. During the quarter, Sabra exercised an option to reset rent under its Avamere lease to a fixed amount tied to the portfolio’s historical performance. The action increased annualized fixed cash rent to $48 million, retroactive to Feb. 1, 2026, compared with $41 million of cash rent paid in 2025.
The Avamere reset added $3.2 million of rental revenue in the quarter, including $1.6 million of out-of-period revenue normalized in quarterly results. Several smaller rent resets, lease amendments and lease extensions added another $1.6 million of cash rental income.
Costa said Sabra expects the Avamere transition to managed senior housing to close later in 2026, at which point annualized rent is expected to rise from $48 million to $53 million. He said the company expects the full $9 million of annualized benefits from other portfolio initiatives to be reflected in 2027, with $1.6 million recognized during the second quarter.
Matros said triple-net skilled nursing rent coverage increased, while the company’s triple-net senior housing occupancy and coverage declined because of the transfer of a high-performing property from triple-net to SHOP. Excluding that transfer, he said results would have been roughly flat and still strong.
Leverage Declines Following RCA Loan Payoff
Sabra recorded a $102.4 million provision for loan losses and other reserves, primarily related to the discounted payoff of the RCA mortgage loan discussed in its July 21 business update. The charge was excluded from normalized quarterly results.
Net debt to adjusted EBITDA declined to 4.61 times as of June 30 from 5.04 times at the end of the first quarter. Costa said the decline reflected the RCA loan payoff and continued earnings growth, putting leverage below Sabra’s prior target of five times.
The company ended the quarter with approximately $1.3 billion in liquidity, including $231.6 million of unrestricted cash, $682.5 million of available credit-facility borrowings and $411.8 million associated with outstanding forward sale agreements under its at-the-market equity program.
On Aug. 3, Sabra’s board declared a quarterly common-stock dividend of $0.30 per share, payable Aug. 31 to shareholders of record on Aug. 14. Costa said the dividend represented a 75% payout ratio based on second-quarter normalized AFFO per share.
About Sabra Healthcare REIT (NASDAQ:SBRA)
Sabra Healthcare REIT, Inc NASDAQ: SBRA is a real estate investment trust that acquires, owns and operates net‐lease healthcare properties. Its diversified portfolio spans senior housing communities, skilled nursing and rehabilitation centers, outpatient medical facilities, medical office buildings, hospitals and life science properties. Sabra structures long‐term, triple‐net lease agreements with healthcare operators, providing stable rental income streams while allowing tenants to focus on patient care and operational excellence.
Serving a broad spectrum of care segments, Sabra's tenants include both regional and national providers of assisted living, independent living, memory care, post‐acute rehabilitation and research and development laboratories.
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