Sabra Health Care REIT, Inc.

Good day, everyone. My name is Adam and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Sabra third quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star one followed by the number one on your telephone keypad. If you'd like to withdraw your question, just press the pound key. I'd like to now turn the call over to Lucas Hartwich, SVP Finance. Please go ahead, Mr. Hartwich. Thank you and good morning.

Before we begin, I want to remind you that we will be making forward-looking statements in our comments and in response to your questions concerning our expectations regarding our future financial position and results of operations, including our earnings guidance for 2024 and our expectations regarding our tenants and operators, and our expectations regarding our acquisition, disposition, and investment plans. These forward-looking statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially, including the risks listed in our Form 10-K for the year ended December 31, 2023, as well as in our earnings press release included as Exhibit 99.1 to the Form 8-K we furnished the SEC yesterday. We undertake no obligation to update our forward-looking statements to reflect subsequent events or circumstances, and you should not assume later in the quarter that the comments we make today are still valid. In addition, references will be made during this call to non-GAAP financial results. Investors are encouraged to review these non-GAAP financial measures, as well as the explanation and reconciliation of these measures to the comparable GAAP results included on the financials page of the investor section of our website at sabrahealth.com. Our form 10Q, earnings release, and supplement can also be accessed in the investor section of our website. And with that, let me turn the call over to Rick Matros, CEO, President, and Chair of Sauber Healthcare REIT.

Thanks, Lucas, and thanks everybody for joining us. To start, I'd note that we've now had several quarters in a row of continuing improvement in all of our primary asset classes. We've really distanced ourselves from the pandemic. We're hitting highs in several statistical categories. So we really feel good about where we are right now. Occupancy for our SNF portfolio is up 130 basis points sequentially. Our skilled mix continues to increase at 110 basis points sequentially and higher now than it's been for quite some time. Occupancy for our same store shop portfolio is up 90 points. 90 basis points sequentially, and margins in both those portfolios continue to strengthen. Occupancy in our triple net senior housing portfolio has been hovering around 90% for four quarters running now. Our EBITDA and RET coverage for our skilled nursing and triple net senior housing portfolios at 1.94 and 1.37 respectively are at levels that are much higher than we've seen for years. certainly well before the pandemic. As noted in the press release, only Avamir of our top 10 saw a decrease, but that was specifically due to the percentage rents that we've been receiving and was still a strong 1.87. I think the fact that we've been getting percentage rents for a number of months now as anticipated, and yet they still have rent coverage as high as it is, shows that this particular lease restructure worked out really exactly as anticipated. And our faith in the operator certainly has been rewarded. Coverage and occupancy in our behavioral and other category were essentially flat sequentially, as these now include four quarters of a lower occupancy, stabilized addiction treatment center that was added to the pool last year. Our leverage has continued to decrease. We increased guidance at the midpoint and have strong at the midpoint, strong growth at something over 6% on a year over year basis. and we expect that to carry over into 2025 as well. Investments for the quarter, both new and previously announced, total just under $100 million. We're now seeing more activity in our investment pipeline than in past months, primarily deals of one or two assets. We're starting to see some more portfolio opportunities as well as more off-market opportunities. As we've talked about really all year, we're really focused on doing high-quality investments with good yields, Operators that we really trust were not interested, nor do we need to do larger portfolio deals. Usually, at least some portion, if not most of the facilities in those larger portfolios do require a lot of work. And we just don't need that noise around us right now. And the way we've approached our investments to date, and we'll continue to approach them, always helping fuel the year-over-year growth that we're seeing and expect to see going forward. There are older assets primarily shop in much of what we're seeing in the pipeline. But as I said, we'll look at those, we'll continue to look at those, but we're just going to stay focused on what we've been doing that is high quality, newer vintage assets. We're starting to see an uptick in skilled nursing opportunities, although not dramatically so, and are committed to doing skilled investments as well. And with that, I'll turn the call over to Talia.