Sabra Health Care: 3 Key Takeaways for Long-Term Investors
Key Points
Sabra raised its full-year normalized FFO guidance midpoint by $0.005 per share.
Third-quarter same-store senior housing operating portfolio occupancy reached 89.2%.
Sabra closed $750 million in investments year to date.
On its third quarter of 2026 earnings call, held on Nov. 3, 2026, Sabra Health Care (NASDAQ:SBRA) raised the midpoint of its full-year guidance for normalized funds from operations, a cash flow metric for real estate investment trusts. Expanding direct management of senior housing properties shifts operating risk while unlocking higher income potential for long-term investors. Active rent resets across licensed care facilities provide revenue growth through upcoming lease expirations. Three takeaways from management explain how the strategy is unfolding.
1. Senior Housing Expansion Is Rebalancing the Portfolio
Sabra is expanding its senior housing operating portfolio, where it collects net operating income directly rather than receiving fixed tenant rent. Management aims to push this segment to 50% of total assets by late 2027, eclipsing skilled nursing properties for the first time.
As we continue to move forward toward 40% SHOP exposure going to 50% by year-end 2027 our senior housing portfolio will outweigh our skilled portfolio for the first time.
-- Richard K. Matros, CEO, president, and chair
2. Skilled Nursing Expirations Offer Rent Increase Opportunities
The company owns skilled nursing facilities that offer 24-hour medical care under long-term leases. Management expects upcoming lease resets through 2031 to generate higher cash rents because current tenant operator earnings far exceed historical lease coverage baselines.
Additionally, as you look to our lease expirations, we expect to see rent increases in those portfolios as rents get reset to fair market given how much higher than fair market rent coverages currently are.
-- Richard K. Matros, CEO, president, and chair
3. Capital Allocation Balance Lowers Leverage While Funding Growth
Sabra trimmed its net debt-to-adjusted EBITDA ratio to 4.54 times. Management funds deal flow using credit facilities and stock sales while keeping debt levels aligned with corporate targets.
As we have stated previously, our strategy is to naturally lower our leverage over time without sacrificing earnings growth. This quarter's results reflect that strategy in action, and it is a strategy we will continue to employ.
-- Michael Lourenco Costa, Chief Financial Officer
Looking Ahead
Full-year guidance updates reflect operational gains across senior housing and triple-net lease properties. Targeted property acquisitions and rent adjustments continue driving expanded cash flow.
The strategic focus that we have had as a result has resulted in 7% to 8% year-over-year earnings growth at the midpoint of guidance this year.
-- Richard K. Matros, CEO, president, and chair
Portfolio balance will remain central to the business model as management anchors operational growth with predictable nursing facility income. And in the meantime, executive leadership expects both healthcare asset classes to deliver long-term cash flow.
That said, we believe it is important to have that diversity in the portfolio As we have demonstrated, our skilled portfolio offers more earnings growth than 2.5% escalators that we have seen historically.
-- Richard K. Matros, CEO, president, and chair
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