Sabra Health Care REIT's Q2 2025: Navigating Contradictions in Investment Strategy and Occupancy Trends

Investment goal and asset focus, occupancy trends and impact of Holiday portfolio transition, investment strategy and deal pursuit, occupancy trends and transition impact, labor cost inflation and occupancy growth are the key contradictions discussed in Sabra Health Care REIT, Inc.'s latest 2025Q2 earnings call.



Investment Goals and Achievements:
- Sabra Health Care REIT, Inc. aims to invest $500 million in 2025, with a focus on increasing its Senior Housing Operational Portfolio (SHOP) from 20% to 30%.
- As of Q2 2025, they have closed on $122 million and been awarded approximately $220 million in senior housing investments.
- This concentration on senior housing investments is driven by strong deal flow and competitive cost of capital.

Revenue and Occupancy Growth:
- Sabra's same-store managed senior housing portfolio saw 5.6% year-over-year revenue growth and 86% occupancy in the second quarter.
- The Canadian portfolio achieved 15.9% cash NOI growth over the same period, surpassing 90% occupancy for over five quarters.
- The growth is linked to elevated occupancy levels, which drive pricing power, and controlled costs, leading to improved cash NOI.

Holiday Portfolio Transition:
- Sabra transitioned its Holiday portfolio to new operators in April 2025, aiming to improve performance.
- This transition included 16 assets remaining in the same-store pool initially, impacting occupancy stability.
- The change is expected to enhance performance, with benefits anticipated over time as new operators stabilize operations.

Medicaid and Medicare Rate Increases:
- Sabra's top 5 skilled nursing tenants are averaging a 5% Medicaid rate increase, with an overall average of 3.5%.
- Medicare market rates rose from 2.8% to 3.2%, an uncommon upward revision.
- These increases benefit Sabra's financial outlook, particularly for skilled nursing facilities.