Q4 2025 Sabra Health Care REIT Inc Earnings Call

February 13, 2026

Speaker #3: What do you want me to do, to do for you? To see you through. A box of rain will ease the pain, and love will see you through.

Speaker #3: Just a box of rain, wind and water. Believe it if you need it; if you don't, just pass it on. Sun and shower, wind and rain, in and out the window, like a moth before a flame.

Speaker #3: And it's just a box of rain. I don't know who put it there. Believe it if you need it, or leave it if you dare.

Sarah Mazur: Believe it if you need it, or leave it if you dare. And it's just a box of rain or a ribbon for your- Look out of any window, any morning, any evening, any day. Maybe the sun is shining, birds are winging, or rain is falling from a heavy sky. What do you want me to do, to do for you to see you through? For this is all a dream we dreamed one afternoon long ago. Walk out of any doorway. Feel your way, feel your way like the day before. Maybe you'll find direction around some corner where it's been waiting to meet you. What do you want me to do? To-

Speaker #3: And it's just a box of rain, or a ribbon for your... Look out of any window, any morning, any evening, any day. Maybe the sun is shining, birds are winging, no rain is falling from a heavy sky.

Speaker #3: What do you want me to do, to do for you? To see you through. For this is all a dream we dream, one afternoon, on the double.

Speaker #3: Walk out of any doorway, feel your way, feel your way like the day before. Maybe you'll find direction around some corner where it's been waiting to meet you.

Speaker #3: What do you want me to do, too?

Speaker #1: Good day, everyone. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sabra 4th Quarter 2025 Earnings Call.

Operator: Good day, everyone. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sabra Q4 2025 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 would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one a second time. I would now like to turn the call over to Lukas Hartwich, Executive Vice President of Finance. Please go ahead, Mr. Hartwich.

Speaker #1: 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 would like to ask a question during that time, simply press * followed by the number 1 on your telephone keypad.

Operator: If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one a second time. I would now like to turn the call over to Lukas Hartwich, Executive Vice President of Finance. Please go ahead, Mr. Hartwich.

Speaker #1: If you would like to withdraw your question, press *1 a second time. I would now like to turn the call over to Lukas Hartwich, Executive Vice President of Finance.

Speaker #1: Please go ahead, Mr. Hartwich.

Speaker #2: 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.

Lukas 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 2026 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, 2025, as well as in our earnings press release, included as Exhibit 99.1 to the Form 8-K we furnished to the SEC yesterday.

Speaker #2: Including our earnings guidance for 2026, 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.

Lukas Hartwich: 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, 2025, as well as in our earnings press release, included as Exhibit 99.1 to the Form 8-K we furnished to the SEC yesterday.

Speaker #2: Including the risks listed in our Form 10-K for the year ended December 31, 2025, as well as in our earnings press release included as Exhibit 99.1 to the Form 8-K we furnished to the SEC yesterday.

Speaker #2: 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.

Lukas Hartwich: 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 10-K, 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 Sabra Health Care REIT.

Speaker #2: 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.

Lukas Hartwich: 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 10-K, 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 Sabra Health Care REIT.

Speaker #2: Our Form 10-K 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 Sabra Health Care REIT.

Speaker #3: Thanks, Lukas. Happy Friday the 13th, everybody. Sabra's NOI growth for the SHOP portfolio, excluding our transition facilities, is expected to be sturdy in 2026, as it has been in 2025.

Rick Matros: Thanks, Lukas. Happy Friday the 13th, everybody. Sabra's NOI growth for the SHOP portfolio, excluding our transition facilities, is expected to be sturdy in 2026, as it has been in 2025, and we expect the transition facilities, as they continue to improve, to add to the overall growth in our SHOP performance. Our guidance at 4.9% and 5.4% growth at the midpoint for normalized FFO and normalized AFFO, respectively, reflects continuing execution of our strategy. Our pipeline continues to be robust. We completed approximately $450 million in investments for 2025. We had discussed on our last call exceeding $500 million.

Speaker #3: And we expect the transition facilities, as they continue to improve, to add to the overall growth in our SHOP performance. Our guidance at 4.9% and 5.4% growth at the midpoint for normalized FFO and normalized AFFO, respectively, reflects continuing execution of our strategy.

Rick Matros: Our guidance at 4.9% and 5.4% growth at the midpoint for normalized FFO and normalized AFFO, respectively, reflects continuing execution of our strategy. Our pipeline continues to be robust. We completed approximately $450 million in investments for 2025. We had discussed on our last call exceeding $500 million.

Speaker #3: Our pipeline continues to be robust. We've completed approximately $450 million in investments for 2025, for about 400 deals. We had discussed on our last call exceeding $500 million—a couple of those deals fell over into 2026, but no deals fell out.

Rick Matros: A couple of those deals fell over into 2026, but no deals fell out, so we're closing on everything that we said we would close on, on our last call. Our investment activity has grown $200 million since our last call, and we're currently in the process of closing $240 million of awarded deals, most of which will close in Q1 and early Q2. Our expectation is that we will materially exceed the volume of 2025 investments and are clearly off to a strong start in 2026. Moving on to our operational results. They continue to be impressive. Our SHOP operational performance showed strong occupancy gains and increased Cash NOI margins. Our same-store senior housing also showed occupancy gains and margin improvement. Our same-store senior housing triple-net showed improved occupancy and maintained high rent coverage.

Speaker #3: So we're closing on everything that we said we would close on in our last call. Our investment activity has grown by $200 million since our last call, and we're currently in the process of closing $240 million of awarded deals, most of which will close in Q1 and early Q2.

Speaker #3: Our expectation is that we will materially exceed the volume of 2025 investments and are clearly off to a strong start in 2026. Moving on to our operational results.

Rick Matros: Our expectation is that we will materially exceed the volume of 2025 investments and are clearly off to a strong start in 2026. Moving on to our operational results. They continue to be impressive. Our SHOP operational performance showed strong occupancy gains and increased Cash NOI margins. Our same-store senior housing also showed occupancy gains and margin improvement. Our same-store senior housing triple-net showed improved occupancy and maintained high rent coverage.

Speaker #3: They continue to be impressive. Our SHOP operational performance showed strong occupancy gains and increased cash NOI margins. Our same-store senior housing also showed occupancy gains and margin improvement.

Speaker #3: Our same-store senior housing triple net showed improved occupancy and maintained high rent coverage. The skilled nursing portfolio again showed increased rent coverage, hitting an all-time high, as well as increased occupancy.

Rick Matros: The skilled nursing portfolio, again, showed increased rent coverage, hitting an all-time high, as well as increased occupancy, and our top 10 triple-net relationships also had another strong showing. Our leverage stayed steady at our current target of 5x, and the regulatory environment remains stable. With that, I'll turn the call over to Darrin for detail on our senior housing portfolio.

Speaker #3: And our top 10 triple-net relationships also had another strong showing. Our leverage stayed steady at our current target of 5x, and the regulatory environment remained stable.

Speaker #3: And with that, I'll turn the call over to Darren for detail on our senior housing portfolio.

Speaker #2: Thank you, Rick. Sabra's managed senior housing portfolio had another solid quarter with continued growth. The total managed portfolio, including non-stabilized communities and joint venture assets at share, had sequential revenue growth of 15.8%.

Darrin Smith: Thank you, Rick. Sabra's managed senior housing portfolio had another solid quarter with continued growth. The total managed portfolio, including non-stabilized communities and joint venture assets at Share, had sequential revenue growth of 15.8%, cash NOI growth of 18.4%, with margin expansion of 60 basis points. These statistics demonstrate sequential improvement in operating results that reflect the continued growth and strong performance in Sabra's senior housing portfolio. During the quarter, Sabra invested over $150 million, adding 4 properties to Sabra's managed portfolio, bringing total year investments to roughly $450 million, with an estimated initial cash yield of 7.5%, and an average age of less than 10 years.

Speaker #2: Cash NOI growth of 18.4%, with margin expansion of 60 basis points. These statistics demonstrate sequential improvement in operating results that reflect the continued growth and strong performance in Sabra's senior housing portfolio.

Darrin Smith: These statistics demonstrate sequential improvement in operating results that reflect the continued growth and strong performance in Sabra's senior housing portfolio. During the quarter, Sabra invested over $150 million, adding 4 properties to Sabra's managed portfolio, bringing total year investments to roughly $450 million, with an estimated initial cash yield of 7.5%, and an average age of less than 10 years.

Speaker #2: During the quarter, Sabra invested over $150 million, adding four properties to Sabra's managed portfolio, bringing total year investments to roughly $450 million, with an estimated initial cash yield of 7.5% and an average age of less than 10 years.

Speaker #2: Additionally, Sabra closed on $27 million of additional managed senior housing assets subsequent to year-end and has another $220 million of awarded senior housing and $20 million of awarded skilled nursing investments, most of which should close in the first quarter or early second quarter.

Darrin Smith: Additionally, Sabra closed on $27 million of additional managed senior housing assets subsequent to year-end, and has another $220 million of awarded senior housing and $20 million of awarded skilled nursing investments, most of which should close in Q1 or early Q2. Deal flow shows no signs of slowing, and despite increased interest in the sector, Sabra remains competitive on new investments. Moving on to the same-store portfolio. Sabra's same-store managed senior housing portfolio, including joint venture assets at Share, continued its strong performance in Q4. The key numbers are: revenue for the quarter grew 6.4% year-over-year, with our Canadian communities growing revenue by 10% in the same period. Q4 occupancy in our same-store portfolio was up 160 basis points to 87.9% year-over-year.

Speaker #2: Deal flow shows no signs of slowing, and despite increased interest in the sector, Sabra remains competitive on new investments. Moving on to the same-store portfolio.

Speaker #2: Sabra's same-store managed senior housing portfolio, including joint venture assets at share, continued its strong performance in the fourth quarter. The key numbers are: revenue for the quarter grew 6.4% year over year, with our Canadian communities growing revenue by 10% in the same period.

Darrin Smith: Sabra's same-store managed senior housing portfolio, including joint venture assets at Share, continued its strong performance in Q4. The key numbers are: revenue for the quarter grew 6.4% year-over-year, with our Canadian communities growing revenue by 10% in the same period. Q4 occupancy in our same-store portfolio was up 160 basis points to 87.9% year-over-year.

Speaker #2: Fourth quarter occupancy in our same-store portfolio was up 160 basis points to 87.9% year over year. Notably, our domestic portfolio occupancy increased 80 basis points to 84.7% during that period, while our Canadian portfolio grew 300 basis points to 94.2% in the same period, marking the seventh consecutive quarter where occupancy was over 90%.

Darrin Smith: Notably, our domestic portfolio occupancy increased 80 basis points to 84.7% during that period, while our Canadian portfolio grew 300 basis points to 94.2% in the same period, marking the seventh consecutive quarter where occupancy was over 90%. RevPOR in Q4 of 2025 continued to rise with an increase of 4.2% year-over-year, with our Canadian portfolio increasing 5.2% in the same period. While RevPOR and occupancy continued to grow, ExpOR increased only 1.6% for the same period, providing for Cash NOI growth of 12.6% on a year-over-year basis. With industry tailwinds at our backs and a very robust pipeline, we should continue to see both organic and external growth in our portfolio.

Speaker #2: Rev Core in the fourth quarter 2025 continued to rise, with an increase of 4.2% year over year, and our Canadian portfolio increased 5.2% in the same period.

Speaker #2: While Rev core and occupancy continue to grow, Ex core increased only 1.6% for the same period, providing for cash NOI growth of 12.6% on a year-over-year basis.

Darrin Smith: While RevPOR and occupancy continued to grow, ExpOR increased only 1.6% for the same period, providing for Cash NOI growth of 12.6% on a year-over-year basis. With industry tailwinds at our backs and a very robust pipeline, we should continue to see both organic and external growth in our portfolio.

Speaker #2: With industry tailwinds at our backs and a very robust pipeline, we should continue to see both organic and external growth in our portfolio. Our net leased senior housing portfolio continues to do well, with continued strong rent coverage reflecting the underlying operational recovery.

Darrin Smith: Our net leased senior housing portfolio continues to do well, with continued strong rent coverage reflecting the underlying operational recovery. And with that, I will turn the call over to Michael Costa, Sabra's Chief Financial Officer.

Speaker #2: And with that, I will turn the call over to Michael Costa, Sabra's Chief Financial Officer.

Speaker #4: Thanks, Darren. For the fourth quarter 2025, we recognized normalized FFO per share of $0.36 and normalized AFFO per share of $0.38. In absolute dollars, normalized FFO and normalized AFFO totaled $91.2 million and $95.2 million this quarter, respectively.

Michael Costa: Thanks, Darrin. For Q4 2025, we recognized normalized FFO per share of $0.36 and normalized AFFO per share of $0.38. In absolute dollars, normalized FFO and normalized AFFO totaled $91.2 million and $95.2 million this quarter, respectively. Cash NOI from our triple-net portfolio decreased $1.3 million from Q3, while cash NOI from our managed senior housing portfolio increased $5.5 million, for a net sequential increase of $4.2 million. As noted last quarter, we transitioned four previously triple-net leased senior housing facilities to our managed senior housing portfolio during Q3, which accounted for the $1.3 million sequential decrease in triple-net cash NOI from Q3 to Q4.

Speaker #4: Cash NOI from our triple net portfolio decreased $1.3 million from the third quarter, while cash NOI from our managed senior housing portfolio increased $5.5 million, for a net sequential increase of $4.2 million.

Speaker #4: As noted last quarter, we transitioned four previously triple-net leased senior housing facilities to our managed senior housing portfolio during the third quarter, which accounted for the $1.3 million sequential decrease in triple-net cash NOI from the third quarter to the fourth quarter.

Michael Costa: As noted last quarter, we transitioned four previously triple-net leased senior housing facilities to our managed senior housing portfolio during Q3, which accounted for the $1.3 million sequential decrease in triple-net cash NOI from Q3 to Q4. Cash NOI from our managed senior housing portfolio totaled $35.6 million for the quarter, compared to $30.1 million for the last quarter.

Speaker #4: Cash NOI from our managed senior housing portfolio totaled $35.6 million for the quarter compared to $30.1 million for the last quarter. This $5.5 million increase was primarily the result of investment activity completed during the third and fourth quarters, together with sequential growth in our same-store portfolio.

Michael Costa: Cash NOI from our managed senior housing portfolio totaled $35.6 million for the quarter, compared to $30.1 million for the last quarter. This $5.5 million increase was primarily the result of investment activity completed during Q3 and Q4, together with sequential growth in our same-store portfolio. Interest and other income was $10.6 million for the quarter, compared to $12.7 million last quarter. This decrease was primarily due to $2.8 million of lease termination income recognized last quarter and backed out of normalized FFO and normalized AFFO. Cash interest expense was $26.6 million, which is consistent with last quarter.

Michael Costa: This $5.5 million increase was primarily the result of investment activity completed during Q3 and Q4, together with sequential growth in our same-store portfolio. Interest and other income was $10.6 million for the quarter, compared to $12.7 million last quarter. This decrease was primarily due to $2.8 million of lease termination income recognized last quarter and backed out of normalized FFO and normalized AFFO. Cash interest expense was $26.6 million, which is consistent with last quarter.

Speaker #4: Interest and other income was $10.6 million for the quarter, compared to $12.7 million last quarter. This decrease was primarily due to $2.8 million of lease termination income recognized last quarter and backed out of normalized FFO and normalized AFFO.

Speaker #4: Cash interest expense was $26.6 million, which is consistent with last quarter. Cash G&A was $12.5 million this quarter, compared to $9.1 million last quarter.

Michael Costa: Cash G&A was $12.5 million this quarter, compared to $9.1 million last quarter. The increase of $3.3 million was primarily due to truing a performance-based compensation expense for the year as a result of hitting certain performance targets. Normalizing for the portion of this adjustment that related to prior periods, cash G&A was $10.6 million for this quarter. As noted in our earnings release, we have introduced 2026 earnings guidance, which I will discuss in further detail. Our full year 2026 guidance on a diluted per share basis is as follows: Net income, $0.60 to $0.64. FFO and normalized FFO, $1.49 to $1.53. AFFO and normalized AFFO, $1.55 to $1.59.

Speaker #4: The increase of $3.3 million was primarily due to truing a performance-based compensation expense for the year as a result of hitting certain performance targets.

Speaker #4: Normalizing for the portion of this adjustment that related to prior periods, cash G&A was $10.6 million for this quarter. As noted in our earnings release, we have introduced 2026 earnings guidance, which I will discuss in further detail.

Michael Costa: As noted in our earnings release, we have introduced 2026 earnings guidance, which I will discuss in further detail. Our full year 2026 guidance on a diluted per share basis is as follows: Net income, $0.60 to $0.64. FFO and normalized FFO, $1.49 to $1.53. AFFO and normalized AFFO, $1.55 to $1.59.

Speaker #4: Our full-year 2026 guidance on a diluted per share basis is as follows: net income of $0.60 to $0.64, and FFO and normalized FFO of $1.49 to $1.53.

Speaker #4: AFFO and normalized AFFO $1.55 to $1.59. At the midpoint, we expect both normalized FFO per share and normalized AFFO per share to increase approximately 5% over 2025.

Michael Costa: At the midpoint, we expect both normalized FFO per share and normalized AFFO per share to increase approximately 5% over 2025. As a reminder, our guidance does not assume any 2026 investment, disposition, or capital markets activities that have not yet been completed. There are a few other important assumptions built into our guidance that I would like to point out. Cash NOI growth for our triple-net portfolio is expected to be low single-digit at the midpoint, in line with contractual escalators. Additionally, our guidance assumes no additional tenants are placed on cash basis or moved to accrual basis for revenue recognition. Average full year cash NOI growth for our same-store managed senior housing portfolio is expected to be in the low to mid-teens.

Speaker #4: As a reminder, our guidance does not assume any 2026 investment disposition or capital markets activities that have not yet been completed. There are a few other important assumptions built into our guidance that I would like to point out.

Michael Costa: Cash NOI growth for our triple-net portfolio is expected to be low single-digit at the midpoint, in line with contractual escalators. Additionally, our guidance assumes no additional tenants are placed on cash basis or moved to accrual basis for revenue recognition. Average full year cash NOI growth for our same-store managed senior housing portfolio is expected to be in the low to mid-teens.

Speaker #4: Cash NOI growth for our triple net portfolio is expected to be low single digit at the midpoint, in line with contractual escalators. Additionally, our guidance assumes no additional tenants are placed on cash basis or moved to accrual basis for revenue recognition.

Speaker #4: Average full-year cash NOI growth for our same-store managed senior housing portfolio is expected to be in the low to mid-teens. General and administrative expense at the midpoint is expected to be approximately $52 million, which includes $12 million of stock-based compensation expense.

Michael Costa: General and administrative expense at the midpoint is expected to be approximately $52 million, which includes $12 million of stock-based compensation expense. Cash interest expense is expected to be $103 million at the midpoint. The weighted average share count assumed in our guidance is approximately 255 million and 256 million for normalized FFO and normalized AFFO, respectively, and is in line with our Q4 weighted average share count, after adjusting for the timing of ATM share issuances during the Q4. Now, briefly turning to the balance sheet. Our net debt to adjusted EBITDA ratio was 5.00 times as of 31 December 2025, in line with our targeted leverage and a decrease of 0.27 times from 31 December 2024.

Speaker #4: Cash interest expense is expected to be $103 million at the midpoint. The weighted average share count assumed in our guidance is approximately 255 million and 256 million for normalized FFO and normalized AFFO, respectively, and is in line with our fourth quarter weighted average share count after adjusting for the timing of ATM share issuances during the fourth quarter.

Michael Costa: Now, briefly turning to the balance sheet. Our net debt to adjusted EBITDA ratio was 5.00 times as of 31 December 2025, in line with our targeted leverage and a decrease of 0.27 times from 31 December 2024. As of December 31, 2025, the cost of our permanent debt was 3.92%, and the weighted average remaining term on our debt was 4.2 years, with the next material maturity being in 2028.

Speaker #4: Now briefly turning to the balance sheet. Our net debt to adjusted EBITDA ratio was 5.00 times as of December 31, 2025, in line with our targeted leverage and a decrease of 0.27 times from December 31, 2024.

Speaker #4: As of December 31, 2025, the cost of our permanent debt was 3.92%, and the weighted average remaining term on our debt was 4.2 years, with the next material maturity being in 2028.

Michael Costa: As of December 31, 2025, the cost of our permanent debt was 3.92%, and the weighted average remaining term on our debt was 4.2 years, with the next material maturity being in 2028. Additionally, we have no floating rate debt exposure in our permanent capital stack, with the only floating rate debt being borrowings under our revolving credit facility. We have continued to proactively use the forward feature under our ATM to issue equity when prices present an opportunity to lock in attractive cost of capital to fund our active pipeline of deals.

Speaker #4: Additionally, we have no floating rate debt exposure in our permanent capital stack, with the only floating rate debt being borrowings under our revolving credit facility.

Michael Costa: Additionally, we have no floating rate debt exposure in our permanent capital stack, with the only floating rate debt being borrowings under our revolving credit facility. We have continued to proactively use the forward feature under our ATM to issue equity when prices present an opportunity to lock in attractive cost of capital to fund our active pipeline of deals.

Speaker #4: We have continued to proactively use the forward feature under our ATM to issue equity when prices present an opportunity to lock in attractive cost of capital to fund our active pipeline of deals.

Speaker #4: During the quarter, we issued 206 million on a forward basis at an average price of $18.79 per share after commissions, and in total, we currently have 322.7 million outstanding under forward contracts at an average price of $18.60 per share after commissions.

Michael Costa: During the quarter, we issued $206 million on a forward basis at an average price of $18.79 per share after commissions, and in total, we currently have $322.7 million outstanding under forward contracts at an average price of $18.60 per share after commissions. We also settled $40 million of outstanding forward contracts to fund this quarter's investment activity. We expect to use the proceeds from the outstanding forward contracts to close on the investments we have been awarded and do so on a leverage-neutral basis.

Speaker #4: We also settled $40 million of outstanding forward contracts to fund this quarter's investment activity. We expect to use the proceeds from the outstanding forward contracts to close on the investments we have been awarded and do so on a leverage-neutral basis.

Speaker #4: As of December 31st, 2025, we are in compliance with all of our debt covenants and have ample liquidity of approximately $1.2 billion, consisting of unrestricted cash and cash equivalents of $71.5 million, available borrowings under our revolving credit facility of $782.4 million, and the $322.7 million outstanding under forward sales agreements under our ATM program.

Michael Costa: As of 31 December 2025, we are in compliance with all of our debt covenants and have ample liquidity of approximately $1.2 billion, consisting of unrestricted cash and cash equivalents of $71.5 million, available borrowings under our revolving credit facility of $782.4 million, and the $322.7 million outstanding under forward sales agreements under our ATM program. As of 31 December 2025, we also had $483 million available under the ATM program. Finally, on 2 February 2026, Sabra's board of directors declared a quarterly cash dividend of $0.30 per common share of stock. The dividend will be paid on 27 February 2026, to common stockholders of record as of the close of business on 13 February 2026.

Michael Costa: As of 31 December 2025, we also had $483 million available under the ATM program. Finally, on 2 February 2026, Sabra's board of directors declared a quarterly cash dividend of $0.30 per common share of stock. The dividend will be paid on 27 February 2026, to common stockholders of record as of the close of business on 13 February 2026. The dividend is adequately covered and represents a payout of 79% of our Q4 normalized AFFO per share. With that, we'll open up the lines for Q&A.

Speaker #4: As of December 31, 2025, we also had $483 million available under the ATM program. Finally, on February 2, 2026, Sabra’s Board of Directors declared a quarterly cash dividend of 30 cents per common share of stock.

Speaker #4: The dividend will be paid on February 27, 2026, to common stockholders of record as of the close of business on February 13, 2026. The dividend is adequately covered and represents a payout of 79% of our fourth quarter normalized AFFO per share.

Michael Costa: The dividend is adequately covered and represents a payout of 79% of our Q4 normalized AFFO per share. With that, we'll open up the lines for Q&A.

Speaker #4: And with that, we'll open up the lines for Q&A.

Speaker #2: Thank you. And at this time, I would like to remind everyone—in order to ask a question, press star, then the number one on your telephone keypad.

Operator: Thank you. At this time, I would like to remind everyone, in order to ask a question, press star and then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Our first question comes from the line of John Kilichowski with Wells Fargo. Your line is open.

Speaker #2: We'll pause for just a moment to compile the Q&A roster. And our first question comes from the line of John Kilachowsky with Wells Fargo.

Speaker #2: Your line is open.

Speaker #3: Hi, good afternoon. Thanks for taking the question. Maybe just starting on the building blocks of your same-store growth. I know you don't give specifics, but maybe you could help us think about it in relation to what you accomplished in '25 from a RevPOR, Explore, and occupancy perspective.

John Kilichowski: Hi, good afternoon. Thanks for taking the question. Maybe just starting on the building blocks with your, your same-store growth. I know you don't give specifics, but maybe you could help us think about it in relation to what you accomplished in 25 from a RevPOR, ExpOR, and occupancy perspective. And then maybe just as we look forward to 27 and 28, how does the success that you're achieving today make you feel about the long-term growth prospects of this business, given the, the supply-demand profile that you're facing?

Speaker #3: And then maybe just as we look forward to '27 and '28, how does the success that you're achieving today make you feel about the long-term growth prospects of this business, given the supply-demand profile that you're facing?

Speaker #4: Yeah, I'll take your first question, John. With regards, I'm assuming you're referring to our 2026 same-store guidance, correct?

Michael Costa: Yeah. I'll take your first question, John. With regards to that, I'm assuming you're referring to our 2026 same-store guidance, correct?

Speaker #3: Yes, correct.

John Kilichowski: Yes, correct.

Speaker #4: Okay, so, I mean, the main building blocks are we expect to see continued occupancy growth in our same-store portfolio. We closed the fourth quarter just under 88%.

Michael Costa: So, I mean, the main building blocks are, you know, we expect to see continued occupancy growth in our same-store portfolio. We closed Q4 just under 88%, and, you know, we fully expect our portfolio to get into the low 90s. So that is one of the key building blocks in our guidance. We do expect there to be, you know, some rate growth, probably, you know, along the lines of what we've seen this last year, you know, low single-digit rate growth, and potentially more. On the expense side, especially since these assets in that pool are approaching kind of that 90% occupancy level, the overall expense growth should be inflationary, right, or somewhere in line with inflation.

Speaker #4: And we fully expect our portfolio to get into the low 90s. So that is one of the key building blocks. In our guidance, we do expect there to be some rate growth, probably along the lines of what we've seen this last year.

Speaker #4: In the low single-digit rate growth for, and potentially more. On the expense side, especially since these assets in that pool are approaching kind of that 90% occupancy level, the overall expense growth should be inflationary, right? Or somewhere in line with inflation.

Michael Costa: On the expense side, especially since these assets in that pool are approaching kind of that 90% occupancy level, the overall expense growth should be inflationary, right, or somewhere in line with inflation. There's not a lot of incremental expense that's going to be added on as they keep pushing past that 90% occupancy level. So the ExpOR growth should remain, you know, pretty muted, and below, you know, an inflationary level. Hopefully, that helps.

Speaker #4: There's not a lot of incremental expense that's going to be added on as they keep pushing past that 90% occupancy level. So the export growth should remain pretty muted and below an inflationary level.

Michael Costa: There's not a lot of incremental expense that's going to be added on as they keep pushing past that 90% occupancy level. So the ExpOR growth should remain, you know, pretty muted, and below, you know, an inflationary level. Hopefully, that helps.

Speaker #4: Hopefully, that helps.

Speaker #3: Yes, that was helpful. And then maybe if we could just jump to the loans receivable book. It looks like there's a maturity towards the end of the year.

John Kilichowski: Yes, that was helpful. And then maybe if we could just jump to the, the loans receivable book. It looks like there's a maturity towards the end of the year. I don't know if you could tell us a little bit more about that, the yield, and then obviously, what's included in guide. I'm assuming that there's nothing on the other side of that. So what's-- Is there any incremental upside from recapturing that and putting some of that back to work, or is there an assumption of what you do with that capital at the end of it?

Speaker #3: I don't know if you could tell us a little bit more about that, the yield, and then obviously what's included in guidance. I'm assuming that there's nothing on the other side of that.

Speaker #3: So, is there any incremental upside from recapturing that and putting some of that back to work, or is there an assumption of what you do with that capital at the end of it?

Speaker #5: Yeah, so the loan you're referring to is the RCA loan. And we're having conversations with Deerfield, who's the equity sponsor, as well as the RCA team, kind of as we speak.

Rick Matros: Yeah. So the loan you're referring to is the RCA loan, and we're having conversations with Deerfield, who's the equity sponsor, as well as the RCA team, kind of as we speak. And so there's nothing really to report on that. They're servicing their debt as they should be, so everything is copacetic there. And since it doesn't expire till the end of the year, the assumption of guidance is that the lease stays in place. It doesn't mean that's going to be the ultimate outcome, but it made the most sense for this year's guidance.

Speaker #5: And so there's nothing really to report on that. They're servicing their debt as they should be, so everything is copacetic there. And since it doesn't expire till the end of the year, the assumption of guidance is that the lease stays in place.

Speaker #5: It doesn't mean that's going to be the ultimate outcome, but it made the most sense for this year's guidance.

John Kilichowski: Mm-hmm. Got it. Thank you.

Speaker #3: Got it. Thank you.

Speaker #2: And our next question comes from the line of Juan Sanabrio with BMO. Your line is open.

Operator: Our next question comes from the line of Juan Sanabria with BMO. Your line is open.

Speaker #5: Hi. Maybe just piggyback on the fact of that last question. On the RCA loan, could you just make any comments, or could you update us on kind of how the tenant's health, in terms of financial strength, how they're positioned?

Juan Sanabria: Hi. Maybe just piggyback on the back of that last question. On the RCA loan, could you just make any comments or could you update us on kind of how the tenant's health in terms of financial strength, how they're positioned?

Speaker #3: Yeah, there's nothing else for us to comment on. We're having discussions, as I said. They're servicing the debt, which should give you an indication of their health.

Rick Matros: Yeah, there's nothing else for us to comment on. We're having discussions. As I said, they're servicing the debt, which should give you an indication of their health, and they're a great operational team.

Speaker #3: And they're a great operational team.

Speaker #5: Okay, fair enough. And then just with regards to CapEx, could you just give us a sense of how much you're expecting to spend on maintenance CapEx, as well as anything kind of over and above?

Juan Sanabria: Okay, fair enough. And then just, with regards to CapEx, could you just give us a sense of how much you're expecting to spend, on maintenance CapEx, as well as anything kind of over and above? You know, if you look at what you've disclosed, and thank you for adding disclosure there around SHOP CapEx, it's been a bit outsized. I'm sure there's some deferred CapEx. We've seen it with others. So just curious if you can give us some rough expectations on what you would think you'll spend in 2026 on the SHOP portfolio.

Speaker #5: If you all look at what you've disclosed—and thank you for adding disclosure there around SHOP capex—it's been a bit outsized. I'm sure there's some deferred capex; you've seen it with others.

Speaker #5: So, just curious if you can give us some rough expectations on what you think you'll spend in 2026 on the SHOP portfolio.

Speaker #4: Yeah, I mean, in terms of maintenance capex, I think you could expect it to be at similar levels like we've been disclosing on our portfolio.

Michael Costa: Yeah, I mean, in terms of maintenance CapEx, I think you could expect it to be at similar levels, like we've been disclosing on our portfolio, you know, quarter-over-quarter. On the, you know, non-maintenance CapEx, the nonrecurring, as we call it in our supplement, it's probably going to be somewhere in that $20 to 30 million range, if I had to ballpark it for 2026.

Speaker #4: Quarter over quarter, on the non-maintenance CapEx—the non-recurring, as we call it in our supplement—it's probably going to be somewhere in that $20 to $30 million range, if I had to ballpark it for 2026.

Speaker #5: Thanks, Mark. Appreciate it.

Juan Sanabria: Thanks, Mark. I appreciate it.

Speaker #4: Yeah. No problem.

Michael Costa: Yeah, no problem.

Speaker #2: And our next question comes from the line of Michael Goldsmith with UBS. Your line is open.

Operator: Our next question comes from the line of Michael Goldsmith with UBS. Your line is open.

Speaker #5: Good afternoon. Thanks a lot for taking my question. Maybe following up on the first question on occupancy—I think you said, for the fourth quarter, it was just under 88%.

Michael Goldsmith: Good afternoon. Thanks, all, for taking my question. Maybe following up on the first question on occupancy. I think you talked Q4, just under 88%. I think you said expected to get in the low 90%. Is that expected for 2026? And then what is the maximum? You know, is this something that kind of caps out at low 90s, mid-90s, high 90s? How are you thinking about the opportunity on occupancy there? Thanks.

Speaker #5: I think you said expected to get in the low 90%. Is that expected for '26? And then what is the maximum? Is this something that kind of caps out at low 90s, mid-90s, high 90s?

Speaker #5: How are you thinking about the opportunity on occupancy there? Thanks.

Speaker #3: Yeah. So we think we can exceed 90%. How much further? Just in 2026, we'll see. But once you get to the mid-90s, you kind of effectively fall as people are moving in and out.

Rick Matros: Yeah. So, we think we can exceed 90%. How much further just in 2026? We'll see. But once you get to the mid-90s, you're kind of effectively full as people are moving in and out. I mean, we have buildings. We have a building in Canada that runs 100% for long periods of time, but that's, that's unusual. So if you're looking at a decent sized portfolio in, in the aggregate, probably mid-90s is a pretty decent number to think about as effectively full.

Speaker #3: I mean, we have buildings—we have a building in Canada—that runs 100% for long periods of time. But that's unusual. So if you're looking at a decent-sized portfolio in the aggregate, probably mid-90s is a pretty decent number to think about as effectively full.

Speaker #5: Thanks for that. And then a follow-up, a small portion of the $240 million of awarded deals is skilled nursing. In your view, what held back the skilled nursing investment in 2025?

Michael Goldsmith: Thanks for that. And then as a follow-up, a small portion of the $240 million of awarded deals is skilled nursing. In your view, what held back the skilled nursing investment in 2025? Do you expect that to change in 2026? Thanks.

Speaker #5: Do you expect that to change in 2026? Thanks.

Speaker #3: Now, we still expect the lion's share of the investment activity to be SHOP of all the transactions we see. It's probably—SHOP represents probably 95% of the opportunity.

Michael Costa: No, we, we still expect the lion's share of the investment activity to be at SHOP. Of all the transactions we see, it's probably SHOP represents probably 95% of the opportunity, of the skilled nursing investments that we have, that we're looking at, that are either have been awarded or we're looking at, from an off-market basis, that they're all coming directly from existing relationships. I would expect that to continue, but it'll be minimal compared to the senior housing investment.

Speaker #3: Of the skilled nursing investments that we have, that we're looking at that have either been awarded or we're looking at from an off-market basis, they're all coming directly from existing relationships.

Speaker #3: I would expect that to continue, but it'll be minimal compared to the senior housing investment.

Speaker #5: Thank you very much. Good luck in 2026.

Michael Goldsmith: Thank you very much. Good luck in 2026.

Speaker #4: Thank you.

Michael Costa: Thank you.

Speaker #3: Thank you. Appreciate it.

Rick Matros: Thank you. Appreciate it.

Speaker #2: And our next question comes from the line of Austin Gershmit with KeyBank Capital Markets. Your line is open.

Operator: Our next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Your line is open.

Speaker #5: Great, thanks. Hello out there. Just when thinking about the shop and the 'why' guidance, should we think about the holiday transition assets as lagging a bit versus the rest of the portfolio currently, but maybe there's potential for those to catch up and be a source of upside as the year progresses?

John Kilichowski: Great. Thanks. Hello out there. Just when thinking about the SHOP and NOI guidance, should we think about the Holiday transition assets as lagging a bit versus the rest of the portfolio currently, but maybe there's potential for those to catch up and being a source of upside as the year progresses?

Austin Wurschmidt: Great. Thanks. Hello out there. Just when thinking about the SHOP and NOI guidance, should we think about the Holiday transition assets as lagging a bit versus the rest of the portfolio currently, but maybe there's potential for those to catch up and being a source of upside as the year progresses?

Darrin Smith: ... Yes, definitely the holiday portfolio is lagging the overall same-store portfolio, but they have a much longer runway as far as upside with respect to occupancy and all the other metrics.

Speaker #3: Yes, definitely, the Holiday portfolio is lagging the overall same-store portfolio, but they have a much longer runway as far as upside with respect to occupancy and all the other metrics.

Speaker #5: Yeah, and that goes to my opening comment that that's going to bolster our overall SHOP growth for the year. Our non-holiday portfolio has been doing really well.

Rick Matros: Yeah, and that goes to my opening comment, that that's gonna bolster our overall shop growth for the year. Our non-holiday portfolio has been doing really well, and so that should bolster it, 'cause we do expect it to improve.

Speaker #5: And so that should bolster it because we do expect it to improve. Can you give us just a sense of what that delta is between the holiday transition assets and the fourth quarter, and maybe what the rest of the portfolio did, just to understand what the catch-up opportunity is?

Austin Wurschmidt: Can you give us just a sense of what that delta is between the Holiday transition assets in Q4 and maybe what the rest of the portfolio did, to just, you know, understand what the catch-up opportunity is? And then, does guidance assume that it fully catches up or just, you know, kind of, makes some additional progress through the year?

Speaker #5: And then, does guidance assume that it fully catches up or just kind of makes some additional progress through the year?

Speaker #4: Yeah. No, I think the way we would answer that question is, I mean, you saw the year-over-year growth for our entire same-store portfolio. And for the ex-Holiday portfolio that we transitioned last year, it's somewhere below that, right?

Michael Costa: Yeah. No, I would-- I, I think the way we would answer that question is, I mean, you saw the year-over-year growth for our entire same-store portfolio, and it's about, for the ex-Holiday portfolio that we transitioned last year, you know, it's somewhere below that, right? And we're not gonna give specifics on to what degree it is below that, but it's not at, you know, 13%, 12%, like the entire portfolio was. But to Rick's earlier point and Darrin's earlier point, you know, as those continue to recover, we do expect there to be some additional NOI uplift as a result.

Speaker #4: And we're not going to give specifics on to what degree it is below that, but it's not at 13%, 12% like the entire portfolio was.

Speaker #4: But to Rick's earlier point, and Darren's earlier point, as those continue to recover, we do expect there to be some additional NOI uplift as a result.

Speaker #5: Right. So, we came into 15% for the year. Prior to the transition, we were in the high teens. And so that's an expectation that we have.

Rick Matros: Right. So we came in at 15% for the year. Prior to the, prior to the transition, we were in high teens, and so, that's, that's an expectation that we have. It's just hard to pinpoint the timeframe, under, under which the, transition facilities will improve enough to get us back there. But that's the-

Speaker #5: It's just hard to pinpoint the timeframe under which the transition facilities will improve enough to get us back there. That's the direction.

Austin Wurschmidt: Understood.

Rick Matros: That's the direction.

Speaker #3: Yeah, and then just one more. I was curious what the driver of the outsized occupancy growth for the SHOP assets in Canada was. I think you said it was 300 basis points year over year.

Austin Wurschmidt: Yeah. And then just one more. I was curious what the driver of the outsized occupancy growth for the SHOP assets in Canada was. I think you said it was 300 basis points year-over-year. I think that was closer to 150 basis points last quarter. I mean, anything specific that's driving that sort of acceleration in occupancy upside?

Speaker #3: I think that was closer to 150 basis points last quarter. I mean, is there anything specific that's driving that sort of acceleration in occupancy upside?

Speaker #4: No, nothing specific. I would just say that the Canadian market is ahead of the U.S. market as far as the recovery is concerned. And from a new supply perspective, I think Canada even has a lower sort of construction rate that's happening there versus in the U.S., which we all know is at near historic lows.

Darrin Smith: No, nothing specific. I would just say that the Canadian market is ahead of the US market as far as the recovery is concerned. From a new supply perspective, I think Canada even has a lower sort of construction rate that's happening there versus in the US, which we all know is at near historic lows.

Speaker #3: Got it. Thanks for the time, everybody.

Austin Wurschmidt: Got it.

Speaker #4: A lack of supply.

Darrin Smith: A lack of supply.

Austin Wurschmidt: Thanks for your time, everybody.

Speaker #4: Yep.

Michael Costa: Yep.

Speaker #2: And our next question comes from the line of Seth Berge with Citi. Your line is open.

Operator: Our next question comes from the line of Seth Berge with Citi. Your line is open.

Speaker #5: Hi. Maybe just going back to kind of the overall investment opportunity set, what part of the $240 million is skilled versus SHOP? And then maybe broadly, how are you seeing kind of the investment landscape change and the opportunity set change?

Seth Bergey: Hi. Maybe just going back to kind of the overall investment opportunity set. What part of the 240 is skilled versus SHOP? And then maybe broadly, you know, how are you seeing kind of the investment landscape change and the opportunity set change? Are your return requirements changing at all, or, you know, how is the acquisition pipeline changing as a result of, you know, as we kind of see more, more REITs kind of get involved in the, in the SHOP space?

Speaker #5: Are your return requirements changing at all, or how is the acquisition pipeline changing as a result of, as we kind of see more REITs kind of get involved in the SHOP space?

Darrin Smith: So number one, the $240 million of awarded transactions is significantly weighted towards SHOP. There are a couple of skilled nursing. Actually, there's one skilled nursing opportunity that we discussed, which is only $20 million of that 240. As far as the continued competitiveness in the market, you know, we're definitely seeing more competition, but with such an enormous deal volume in the market, we're still able to find high quality, newer vintage assets at good yields.

Speaker #4: So, number one: the $240 million of awarded transactions is significantly weighted towards SHOP. There are a couple of skilled nursing—actually, there's one skilled nursing opportunity that we discussed, which is only $20 million of that $240 million.

Speaker #4: As far as the continued competitiveness in the market, we're definitely seeing more competition, but with such an enormous deal volume in the market, we're still able to find high-quality, newer vintage assets at good yields.

Speaker #5: And our return expectations haven't changed, so our IRR return expectations are still low double-digit.

Rick Matros: Our return expectations haven't changed, so our IRR return expectations are still going low double digit.

Speaker #3: Okay. Thank you. That's helpful.

Seth Bergey: Okay. Thank you. That's helpful.

Speaker #2: And our next question comes from the line of Michael Shreyak with Green Street. Your line is open.

Operator: Our next question comes from the line of Michael Shroyak with Green Street. Your line is open.

Operator: Our next question comes from the line of Michael Stroyeck with Green Street. Your line is open.

Speaker #6: Thanks. Good morning. Can you shed some light on how the non-same-store SHOP assets are growing? And are you expecting meaningfully different NOI growth within that portfolio relative to the same-store pool in 2026?

Michael Stroyeck: Thanks. Good morning. Can you shed some light on how the non-same-store SHOP assets are growing, and are you expecting meaningfully different NOI growth within that portfolio relative to the same-store pool in 2026?

Speaker #4: Yeah. I mean, in terms of the facilities that are not included in our same-store pool, there's a component of that that are more recent investments, right?

Michael Costa: Yeah. I mean, in terms of the facilities that are not included in our same-store pool, you know, there's a component of that that are more recent investments, right? They just don't meet the same-store criteria, because we haven't owned them long enough. And as we've talked about on calls, the last couple of calls, the investments that we've been making, we're going into those with, call it, you know, high 80%, maybe even low 90% occupancy, but there is still some room to run there on the NOI side. And once those get folded into the same-store pool, you know, those will be, their performance will be reflected. And then in terms of other assets that may not be included in the pool, that are not recent transactions, you know, their occupancy is a little bit lower.

Speaker #4: They just don't meet the same-store criteria because we haven't owned them long enough. And as we've talked about on calls, the last couple of calls, the investments that we've been making—

Speaker #1: Are . We're going into those with call it high , 80% , maybe even low 90% occupancy . But there is still some room to run there on the NOI side .

Speaker #1: And once those get folded into the same store pool , you know those will be their performance will be reflected . And then in terms of other assets that may not be included .

Michael Costa: And once those get folded into the same-store pool, you know, those will be, their performance will be reflected. And then in terms of other assets that may not be included in the pool, that are not recent transactions, you know, their occupancy is a little bit lower.

Speaker #1: In the pool , that are not recent transactions . You know , their occupancy is a little bit lower . They've they're excluded for a reason .

Michael Costa: They're excluded for a reason. You know, there may have been some renovations done, some repositioning of the asset at some point in time, and those assets are in the process of recovering, and once they get to a reasonable spot, then we'll include them into the pool. But those assets, you know, by definition, will have some opportunity for increased NOI growth, given where they are performance-wise today.

Speaker #1: You know, there may have been some renovations done, some repositioning of the asset at some point in time. And those assets are in the process of recovering.

Speaker #1: And once they get to a reasonable spot , then we'll include them into the pool . But those assets , you know , by definition , will have some opportunity for increased NOI growth given where they are performance wise today .

Speaker #2: But as the non as a non same store gets folded in over time , it's not going to result in reduced numbers for us .

Rick Matros: But as the non same store gets folded in over time, it's not gonna result in reduced numbers for us.

Speaker #3: Okay . Understood . And then maybe one question on pricing power . How long do you expect that mid-single digit rev growth to continue within the the Canadian portfolio .

Michael Stroyeck: ... Okay, understood. And then maybe one question on pricing power. How long do you expect that mid-single digit rev core growth to continue within the Canadian portfolio? And then when or if do you expect the US business to catch up?

Speaker #3: And then, when or if, do you expect the U.S. business to catch up?

Darrin Smith: I would expect, the Canadian portfolio should continue on with that same sort of trajectory, at least over the next year. And it depends with respect to on the US portfolio, it depends on the occupancy. As occupancy continues to increase, there will be more pricing power, and we should see some elevated growth at that point.

Speaker #4: I would expect the Canadian portfolio should continue on with that, that same sort of trajectory, at least over the next year. And it depends, with respect, on the US portfolio.

Speaker #4: It depends on occupancy. As occupancy continues to increase, there will be more pricing power, and we should see some elevated growth at that point.

Speaker #2: But it's pretty impossible to even take a guess at how long it's going to take for the US market to catch up to the Canadian market, because it's a pretty big gap right now.

Rick Matros: But it's pretty impossible to sort of even take a guess at how long it's gonna take for the US market to catch up to the Canadian market, 'cause it's a pretty big gap, right now.

Speaker #3: Makes sense. Thanks for the time.

Michael Stroyeck: Makes sense. Thanks for the time.

Speaker #2: Yep

Rick Matros: Yep.

Darrin Smith: Yep.

Speaker #5: And our next question comes from the line of Farrell Granat with Bank of America. Your line is open.

Operator: Our next question comes from the line of Farrell Granath with Bank of America. Your line is open.

Speaker #6: Thank you for taking my questions. My first one is in regards to as you're entering into these SHOP assets, largely, which occupancy are you trying to enter in at, and does that allow a greater ramp as that enters from your non-same store into your same store, providing potentially greater duration?

Operator: Thank you for taking my questions. My first one is regards to, as you're entering into these SHOP assets, largely, which occupancy are you trying to enter in at? And does that allow a greater ramp as that enters from your non-same store into your same store, providing potentially greater duration as we're talking about the same-store NOI growth?

Farrell Granath: Thank you for taking my questions. My first one is regards to, as you're entering into these SHOP assets, largely, which occupancy are you trying to enter in at? And does that allow a greater ramp as that enters from your non-same store into your same store, providing potentially greater duration as we're talking about the same-store NOI growth?

Speaker #6: As we're talking about the same-store NOI growth,

Speaker #2: Yeah, a lot of the assets that we're acquiring are sort of 86, 87%. There are some that are a little bit higher, but mostly, mostly the sort of 86, 87% range.

Rick Matros: Yeah. A lot of the assets that we're acquiring are sort of 86%, 87%. There are some that are a little bit higher, but mostly, mostly the sort of 86%, 87% range, so that gives us plenty of room for growth, particularly when you factor in the operating leverage. You know, once you get into those higher numbers, you just have a great pull-through on the revenue side because, as Mike mentioned earlier, you don't have much in the way of incremental costs, so the growth becomes outsized.

Speaker #2: So that gives us plenty of room for growth , particularly when you factor in the operating leverage . You know , once you get into those higher numbers , you just have a great pull through on the revenue side because as Mike mentioned earlier , you don't have much in the way of incremental costs .

Speaker #2: So the growth becomes outsized

Speaker #6: Great . And I guess similar along those lines , while while we were just speaking about the Canadian portfolio and thinking about NOI margins going forward , what at what point does that almost cap out , or have you do you have an example of one of a facility with higher pricing power , high occupancy , that has been able to really level out expenses just to give a sense of what direction this portfolio can go towards

Operator: Great. And I guess similar along those lines, while we were just speaking about the Canadian portfolio and thinking about NOI margins going forward, at what point does that almost cap out, or do you have an example of one of a facility with higher pricing power, high occupancy, that's been able to really level out expenses, just to give a sense of what direction this portfolio can go towards?

Farrell Granath: Great. And I guess similar along those lines, while we were just speaking about the Canadian portfolio and thinking about NOI margins going forward, at what point does that almost cap out, or do you have an example of one of a facility with higher pricing power, high occupancy, that's been able to really level out expenses, just to give a sense of what direction this portfolio can go towards?

Speaker #2: So we have some anecdotal evidence in Canada with a couple of buildings where they've really maxed out in the margins , are really quite high , but it's anecdotal .

Rick Matros: So we have some anecdotal evidence in Canada with a couple of buildings where they've really maxed out, and the margins are really quite high, but it's anecdotal. It's one or two buildings. You can't really extrapolate from it, much less take that and make assumptions about the US. But you know, the margin growth is. We still have a pretty nice runway there, so to expect, you know, assisted living margins to exceed 35% is not, is not lowballing it or highballing it. It's a realistic expectation. From our perspective, the question is: How much higher can it go than that? And obviously, independent living is even higher.

Speaker #2: It's 1 or 2 buildings you can't really extrapolate from it , much less take that and make assumptions about the US . But you know , the margin growth is we saw a pretty nice runway there .

Speaker #2: So to expect , you know , assisted living margins to exceed 35% is not is not lowballing it or high balling it . It's a realistic expectation from our perspective .

Speaker #2: The question is, how much higher can it go than that? And obviously, independent living is even higher.

Speaker #6: Thank you

Operator: Thank you.

Farrell Granath: Thank you.

Speaker #5: And our next question comes from the line of Alec Fagan with Baird. Your line is open.

Operator: Our next question comes from the line of Alex Fagan with Baird. Your line is open.

Operator: Our next question comes from the line of Alec Feygin with Baird. Your line is open.

Speaker #7: Hey , thanks for taking my question . Maybe if you could speak on Deal Flow and how competition is evolving . Maybe . Where are you seeing cap rate compression and and where is pricing holding up ?

Alec Feygin: Hey, thanks for taking my question. Maybe if you can speak on deal flow and how competition is evolving, maybe where are you seeing cap rate compression and where is pricing holding up?

Speaker #4: Sure . We're we're definitely seeing cap rate compression as , as as the sector gains more and more popularity . And then private equity as well is getting involved .

Darrin Smith: Sure. We're definitely seeing cap rate compression as the sector gains more and more popularity. And then private equity as well is getting involved. However, the private equity investment, they haven't made a big splash. Typically, when you see them transacting on opportunities, it's kind of a 1 to 3 asset sort of acquisition, and they tend to be focused more on either trophy assets in premier locations or deep sort of value add opportunities, neither of which we're focused on. Fortunately, the cap rate compression, although it's definitely there, we've still been able to find and continue to find newer assets in solid markets in that 7 cap range.

Speaker #4: However , the private equity investment , they haven't made a big splash . Typically when you see them transacting on on opportunities , it's kind of a 1 to 3 asset sort of acquisition .

Speaker #4: And they tend to be focused more on either trophy assets and premier locations, or deep sort of value-add opportunities. Neither of which we're focused on.

Speaker #4: Fortunately , the cap rate compression , although it's it's definitely there . We've still been able to to find and continue to find newer assets in solid markets in that seven seven cap range

Speaker #7: Nice, and just sticking with the SHOP stuff—are you willing to lend to the development of new SHOP, or are there any of those opportunities bubbling up?

Alec Feygin: Nice. And just sticking with the SHOP stuff, are you willing to lend to the development of new SHOP, or are there any of those opportunities bubbling up?

Darrin Smith: Yes, actually, we have a program that's preferred equity, so we're not lending, but we'll provide preferred equity on developments. Those typically carry with them, you know, double-digit returns, with a purchase option and then a kicker on the back end. So it provides us with a solid investment return along the way and provides optionality in the future and to some extent creates a future pipeline. Although we continue to see more development opportunities, most of them still don't pencil, but I am starting, or we are starting to see deals that actually pencil. So I think it will pick up.

Speaker #4: Yes , actually we we have a program that's preferred equity . So we're not lending , but we'll provide preferred equity on developments .

Speaker #4: Those typically carry with them . You know , double digit returns with a purchase option and then a kicker on the back end .

Speaker #4: So it creates—provides us with a solid investment return along the way, and provides optionality in the future, and to some extent, creates a future pipeline.

Speaker #4: Although the although we I'm continuing continue to see more development opportunities , most of them still don't pencil . But I am starting or we are starting to see deals that actually pencil .

Speaker #4: So, I think it will pick up. Yeah.

Alec Feygin: Interesting.

Darrin Smith: Yeah.

Speaker #7: But thank you, guys. That's it for me.

Alec Feygin: But thank you, guys. That's it for me.

Speaker #5: And as a reminder, it is star one if you would like to ask a question. Our next question comes from the line of Omotayo Okusanya with Deutsche Bank.

Operator: As a reminder, it is star one if you would like to ask a question. Our next question comes from the line of Omotayo Okusanya with Deutsche Bank. Your line is open.

Speaker #5: Your line is open .

Speaker #8: Hi . Yes . Good morning out there . Great to see all this activity on the skilled nursing side for a second . Could you just talk a little bit about how you're seeing the regulatory outlook for the rest of the year , whether it's on the Medicaid side , whether , again , also on the Medicare Part A side , just kind of giving some some of what we saw with Medicare Advantage .

Omotayo Okusanya: ... Hi, yes, good morning out there. Great to see all this activity. On the skilled nursing side for a second, could you just talk a little bit about how you are seeing the regulatory outlook for the rest of the year, whether it's on the Medicaid side, whether, again, also on the Medicare Part A side, just kind of given some of what we saw with Medicare Advantage?

Speaker #2: Yeah , I don't think there's a read through from from the Ma rate decision . So I think for , for our space , it's very formulaic , kind of as I said over the last couple of calls , the outsized rate increases , both on the Medicaid side and the Medicare side , we got through the pandemic , you know , really started tapering down a little bit last year .

Rick Matros: Yeah, I don't think there's a read-through from from the MA rate decision. So I think for our space, look, it's very formulaic. Kind of, as I said, over the last couple of calls, the outsize rate increases both on the Medicaid side and the Medicare side. We got through the pandemic, you know, really started tapering down a little bit last year. We hit a high point, I think, in 2023 on both Medicaid and Medicare rates, because of the time frame through which the cost support process runs and when that, all that inflation was captured. So they came down a little bit in 2025, but was still quite robust.

Speaker #2: We hit a high point, I think, in 2023 on both Medicaid and Medicare rates because of the time frame through which the cost report process runs and when all that inflation was captured.

Speaker #2: So they came down a little bit in 25 . But was still quite robust and we expect them to come down some more this year until and then maybe when you get into 2026 , you you're sort of back to where you were with historical averages .

Rick Matros: And we expect them to come down some more this year, until then, and then maybe when you get into 2026, you, you're sort of back to where you were with historical averages. So I don't see anything unusual there, at all. And there's no, there's no dialogue that's happening at the state level, around Medicaid rates that are causing us any concern.

Speaker #2: So I don't see anything unusual there at all. And there's no—there's no dialogue that's happening at the state level around Medicaid rates that are causing us any concern.

Omotayo Okusanya: That's helpful. Then also on the SHOP side, again, first, kind of six weeks of 2026 has been a little bit strange, kind of higher flu season, very strange weather. Just kind of curious if that's impacting move-in, move-out activity, at least for the first six weeks of the year, and if it is, if that started to stabilize out.

Speaker #8: That's helpful . And then also on the shop side , again , first kind of six weeks of 2026 has been a little bit strange , kind of higher flu season , very strange weather , just kind of curious if that's impacting move in move out activity , at least for the first six weeks of the year .

Speaker #8: And if it is, if that started to stabilize out.

Speaker #2: Yeah , not really . It's been pretty muted . Flu season has been relatively muted . So yeah , not much

Rick Matros: Yeah, not really. It's been pretty muted. Flu season's been relatively muted, so yeah, not much.

Speaker #8: Great . Thank you .

Omotayo Okusanya: Great. Thank you.

Speaker #2: Thanks Tyler .

Rick Matros: Thanks, Kyle.

Rick Matros: Thanks, Omotayo.

Speaker #5: And our next question comes from the line of Rich Anderson with Cantor Fitzgerald. Your line is open.

Operator: Our next question comes from the line of Rich Anderson with Cantor Fitzgerald. Your line is open.

Speaker #9: Hey, thanks, and good morning out there. So, I have just one question as it relates to SHOP and the execution of a SHOP platform.

Rich Anderson: Hey, thanks, and good morning out there. So I have just one question as it relates to SHOP and the execution of a SHOP platform. You know, Ventas and Welltower have established programs to grow, you know, in the year following. I'm not worried about people finding acquisitions. I'm worried about them executing on the operations in the aftermath. You guys have been doing this for 10 years on the SHOP side. Now, a lot of your peers are sort of getting into it today. Do you find, or do you think back that, boy, you kind of learned a lot of lessons out of the gate, that having been in it for 10 years has given you sort of an advantage from an operating point of view?

Speaker #9: You know , Ventas and Welltower have established programs to grow , you know , in the year following . I'm not worried about people finding acquisitions .

Speaker #9: I'm worried about them executing on the operations in the aftermath. You guys have been doing this for ten years on the SHOP side.

Rich Anderson: You guys have been doing this for 10 years on the SHOP side. Now, a lot of your peers are sort of getting into it today. Do you find, or do you think back that, boy, you kind of learned a lot of lessons out of the gate, that having been in it for 10 years has given you sort of an advantage from an operating point of view?

Speaker #9: Now , a lot of your peers are sort of getting into it today . Do you find or do you think back that boy , you kind of learned a lot of lessons out of the gate that having been in it for ten years , has given you sort of an advantage from an operating point of view .

Speaker #9: And I'm just curious if you think that there are it's more complicated , perhaps as an operating business than than maybe some on the outside looking in might realize and I'm wondering if there were lessons learned earlier on in your shop existence , that you that you put into into execution over the course of the past several years , that puts you at a better advantage to grow .

Rich Anderson: You know, I'm just curious if you think that it's more complicated, perhaps, as an operating business than maybe some on the outside looking in might realize. I'm wondering if there were lessons learned earlier on in your SHOP existence that you put into, you know, into execution over the course of the past several years that puts you at a better advantage to grow. Thanks.

Speaker #9: Thanks .

Speaker #2: Yeah . Thanks , Rich . So a couple of things . One , it is more complicated . It's becoming more complicated as acuity rises under the assumption that you're aligning yourself with operators that are pushing acuity up , which we are .

Rick Matros: Yeah. Thanks, Rich. So a couple of things. One, it is more complicated, and it's becoming more complicated as acuity rises under the assumption that you're aligning yourself with operators that are pushing acuity up, which we are. I think, you know, one of the lessons that got learned along the way is when you've got a team at the REIT that's used to working with just triple net, working and really getting into the details and working side by side with those operators under a SHOP structure is very different. And so it took some time, I think, to acclimate to that. I think one of the advantages that we have is from the very beginning, our asset management team has only been comprised of ex-operators.

Speaker #2: I think , you know , one of one of the lessons that got learned along the way is when you've got a team at the right that's used to working with just triple net working and really getting into the details and working side by side with those operators under a shop structure is very different .

Speaker #2: And so it took some time , I think , to acclimate to that . I think one of the advantages that we have is from the very beginning , our asset management team has only been comprised of operators .

Rick Matros: And so it took some time, I think, to acclimate to that. I think one of the advantages that we have is from the very beginning, our asset management team has only been comprised of ex-operators. So that was something that we did intentionally when we first did the spin and started building up all those functions. So, I know folks know kind of my operating background, but it isn't just me. We've built a really deep operating bench throughout the company, and we've added a business intelligence unit along the way as well for better data analysis.

Speaker #2: So that was something that we did intentionally when we first did the spin and started building up all those functions . So so I know folks know kind of my operating background , but it isn't it isn't just me .

Rick Matros: So that was something that we did intentionally when we first did the spin and started building up all those functions. So, I know folks know kind of my operating background, but it isn't just me. We've built a really deep operating bench throughout the company, and we've added a business intelligence unit along the way as well for better data analysis. So I think being robust in those areas has paid off for us. And so as we grow the SHOP portfolio going forward, everything that we add from an infrastructure perspective at this point is just incremental for us. So, you know, now it's a matter of continuing to fine-tune, especially with all the technological advancements and utilization of AI and things like that.

Speaker #2: We built a really deep operating bench throughout the company, and we've added a business intelligence unit along the way as well. For better data, data analysis, and so I think being robust in those areas has paid off for us.

Rick Matros: So I think being robust in those areas has paid off for us. And so as we grow the SHOP portfolio going forward, everything that we add from an infrastructure perspective at this point is just incremental for us. So, you know, now it's a matter of continuing to fine-tune, especially with all the technological advancements and utilization of AI and things like that. But, I think the formation of our business intelligence unit positions us well to do that.

Speaker #2: And so, as we grow the SHOP portfolio going forward, everything that we add from an infrastructure perspective at this point is just incremental for us.

Speaker #2: So , you know , now it's a matter of continuing to fine tune , especially with all the technological advancements and utilization of AI and and things like that .

Speaker #2: But I think the formation of our business intelligence unit positions us well to do that.

Rick Matros: But, I think the formation of our business intelligence unit positions us well to do that.

Speaker #1: And I'll add something to that . Sorry . I'll add something else to that . Rich . And it's not necessarily I wouldn't call it a lesson learned .

Omotayo Okusanya: And knowing--

Rich Anderson: And knowing--

Michael Costa: I'll add something to that. Sorry, I'll add something else to that, Rich. It's not necessarily. I wouldn't call it a lesson learned. I think it's just good management, which is the way that we internally manage, oversee, and operate on that portfolio has evolved over the last 10 years, as you would expect. I think it'd be kind of foolish for somebody to assume somebody with a company with 10 SHOP assets is gonna have the same infrastructure, same processes, same everything as somebody with 1,000 SHOP assets, right? But that willingness and that appetite to continue to evolve ourselves and reinvent ourselves and how we do that and continue getting better, that's something that has changed over the years. I wouldn't say that's a lesson learned. I think that's just a, you know, spirit of constant improvement.

Speaker #1: I think it’s just good management, which is the way that we internally manage, oversee, and operate on that portfolio has evolved over the last ten years, as you would expect.

Speaker #1: I think it'd be kind of foolish for somebody to assume somebody with a company with ten shop assets is going to have the same infrastructure, same processes, same everything as somebody with 1,000 shop assets.

Speaker #1: Right? But that willingness and that appetite to continue to evolve ourselves and reinvent ourselves, and how we do that and continue getting better, that's something that has changed over the years.

Michael Costa: But that willingness and that appetite to continue to evolve ourselves and reinvent ourselves and how we do that and continue getting better, that's something that has changed over the years. I wouldn't say that's a lesson learned. I think that's just a, you know, spirit of constant improvement.

Speaker #1: I wouldn't say that's a lesson learned. I think that's just a, you know, spirit of constant improvement.

Speaker #9: When you think of , I don't know , maybe you have 60 employees at Sabra present company excluded . How many of them would you say are sort of focused primarily on senior housing , operating ?

[Analyst] (Cantor Fitzgerald): ... When you think of, I don't know, maybe you have 60 employees at Sabra, present company excluded, how many of them would you say are sort of focused primarily on senior housing operating?

Rich Anderson: When you think of, I don't know, maybe you have 60 employees at Sabra, present company excluded, how many of them would you say are sort of focused primarily on senior housing operating?

Speaker #1: I mean , in terms of people that are completely dedicated to senior housing operating , that would we have a section of our accounting group that's probably , I don't know , 6 or 7 professionals that that's all they do .

Michael Costa: I mean, in terms of people that are completely dedicated to senior housing operating, we have a section of our accounting group that's probably, I don't know, 6, 7 professionals. That's all they do. Our asset managers spend a lot of their time, as you would expect, on that portfolio. They also spend time on our triple-net portfolio as well. But I think everybody, to a person here at Sabra, is involved, as we should be.

Speaker #1: Our asset managers spend a lot of their time, as you would expect, on that portfolio. They also spend time on our triple net portfolio as well.

Speaker #1: But I think everybody, to a person, here at Sabra is involved, as we should be.

Speaker #2: Yeah . The other thing I would point out is our investment team , who don't necessarily have an operational background . They were completely in sync with the asset management team , and they go out to the buildings with them .

Rick Matros: Yeah, the other thing I would point out is our investment team, who don't necessarily have an operational background. They work completely in sync with the asset management team, and they go out to the buildings with them. So over the years, our investment management team, who doesn't have an operational background, has now spent so much time going through buildings that we're looking to acquire side by side with our asset managers, who are operators, that their understanding of operations has really expanded tremendously. So, so if you look at our investment team, our asset management team, and the folks that are completely dedicated to SHOP and accounting and finance, it's a pretty big chunk of that with 55 people, of that 55, of those 55 people.

Speaker #2: So over the years, our investment management team, who doesn't have an operational background, has now spent so much time going through buildings that we're looking to acquire, side by side with our asset managers who are operators, that their understanding of operations has really expanded tremendously.

Speaker #2: So . So if you look at our investment team , our asset management team , and the folks that are completely dedicated to shop and accounting and finance , it's a pretty big chunk of that .

Rick Matros: So, so if you look at our investment team, our asset management team, and the folks that are completely dedicated to SHOP and accounting and finance, it's a pretty big chunk of that with 55 people, of that 55, of those 55 people.

Speaker #2: We have 55 people, of that, 55 of those, 55 people.

Speaker #9: Okay, great. That's all I got. Thanks.

[Analyst] (Cantor Fitzgerald): Okay, great. That's all I got. Thanks.

Rich Anderson: Okay, great. That's all I got. Thanks.

Speaker #2: Thanks .

Rick Matros: Thanks.

Michael Costa: Thanks.

Speaker #5: And as a reminder, it is star one if you would like to ask a question. And with no additional questions at this time, I will turn the call back over to Mr. Richard Matros for closing remarks.

Operator: As a reminder, it is star one if you would like to ask a question. With no additional questions at this time, I will turn the call back over to Mr. Rick Matros for closing remarks.

Speaker #2: Thank you for your support, and thanks for dialing in for the call. I hope you all have a great Valentine's Day weekend with whoever you spend Valentine's Day with.

Rick Matros: Thank you for your support, and thanks for dialing in for the call. I hope you all have a great Valentine's Day weekend with whoever you spend Valentine's Day with. Take care.

Speaker #2: Take care

Speaker #5: And, ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Operator: Ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

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Q4 2025 Sabra Health Care REIT Inc Earnings Call

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