Sabra Health Care REIT Inc
For the period ended Dec 31, 2024. Filed Feb 19, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 19, 2025
SBRA$21.02+0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-27.
0001492298-24-000008
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-19.
0001492298-25-000008
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 157 previous paragraphs and 155 current paragraphs.
109 unchanged; 35 reworded; 9 added; 10 removed; 3 previous and 2 current paragraphs rearranged.
Tables are not compared: 6 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
•Recently Issued Accounting Standards Updates
Current report
Recently Issued Accounting Standards Updates
Current report
(Recovery of) Provision for Loan Losses
Current report
Other Income
Current report
During the year ended December 31, 2024, we recognized $0.4 million of loss from our unconsolidated joint ventures compared to $2.9 million of loss for the year ended December 31, 2023. The $2.5 million net improvement is primarily related to a $2.7 million increase in revenues net of operating expenses primarily due to increased occupancy, which includes $0.2 million related to one senior housing community acquired by one of our joint ventures after January 1, 2023.
Current report
During the year ended December 31, 2024, we utilized the forward feature of the ATM Program to allow for the sale of up to 7.5 million shares of our common stock at an initial weighted average price of $15.47 per share, net of commissions, and we settled 6.0 million shares at a weighted average net price of $14.90 per share, after commissions and fees, resulting in net proceeds of $89.2 million.
Current report
As of December 31, 2024, 1.5 million shares remained outstanding under the forward sale agreements, with an initial weighted average price of $17.33 per share, net of commissions.
Current report
As of December 31, 2024, we had $382.8 million available under the ATM Program. Subject to market conditions, we expect to use proceeds from our ATM Program to finance future investments in properties.
Current report
On April 22, 2024, CMS issued a final rule that establishes minimum nurse staffing requirements for long-term care facilities (the “Minimum Staffing Standards”). The Minimum Staffing Standards will require a total nurse staffing standard of 3.48 hours per resident day (“HPRD”), which must include at least 0.55 HPRD of direct registered nurse care and 2.45 HPRD of direct nurse aide care. Facilities may use any combination of nurse staff (registered nurse, licensed practical nurse and licensed vocational nurse, or nurse aide) to account for the additional 0.48 HPRD needed to comply with the total nurse staffing standard. Additionally, the Minimum Staffing Standards will require facilities to meet new facility assessment requirements and have a registered nurse onsite 24 hours a day, seven days a week, to provide skilled nursing care. The Minimum Staffing Standards became effective on June 21, 2024, with a compliance deadline for the new facility assessment requirements of August 8, 2024 and a phase-in period consisting of three phases over three years for non-rural facilities and over five years for rural facilities for the staffing requirements. We believe the Minimum Staffing Standards, as implemented in its current form, will exacerbate the staffing challenges already faced by our tenants. The Minimum Staffing Standards are currently being challenged in federal court, however there can be no assurance that the outcome of such challenges will be favorable to us.
Removed paragraphs (10)
Previous report
•Recently Issued Accounting Standards Update
Previous report
Investment in Unconsolidated Joint Venture
Previous report
During the year ended December 31, 2023, our joint venture with Marlin Spring (the “Marlin Spring Joint Venture”) completed the acquisition of one additional senior housing community with a gross investment of CAD $30.0 million, excluding acquisition costs. In addition, the Marlin Spring Joint Venture assumed and financed an aggregate CAD $23.6 million of debt associated with the additional acquisition. Our equity investment in the additional acquisition was CAD $6.1 million. See Note 4, “Investment in Real Estate Properties—Investment in Unconsolidated Joint Ventures,” in the Notes to Consolidated Financial Statements for additional information regarding this investment.
Previous report
Credit Agreement
Previous report
Effective on January 4, 2023, we and certain of our subsidiaries entered into the Credit Agreement. See “—Liquidity and Capital Resources—Material Cash Requirements—Credit Agreement.”
Previous report
At-The-Market Common Stock Offering Program
Previous report
Recently Issued Accounting Standards Update
Previous report
Other Income (Expense)
Previous report
During the year ended December 31, 2023, we recognized $2.9 million of loss, including $8.7 million of depreciation expense and $3.9 million of interest expense, related to 16 senior housing communities acquired by two joint ventures after January 1, 2022.
Previous report
During the year ended December 31, 2022, we recognized $98.0 million of loss primarily from our joint venture with affiliates of TPG Real Estate, the real estate platform of TPG (the “Enlivant Joint Venture”), includinga $57.8 million other-than-temporary impairment recorded during the year ended December 31, 2022 (see Note 4, “Investment in Real Estate Properties” in the Notes to Consolidated Financial Statements for additional information regarding the impairment). Effective January 1, 2023, we discontinued applying the equity method of accounting to the Enlivant Joint Venture and no loss was recognized during the year ended December 31, 2023. Effective May 1, 2023, we withdrew and resigned our membership in the Enlivant Joint Venture and accordingly, no longer have an equity interest in the Enlivant Joint Venture as of such date. We have not guaranteed any obligations of and are not required to provide any support to the Enlivant Joint Venture.
Reworded paragraphs (35)
Previous wording
Our operations have been and are expected to continue to be impacted by economic and market conditions. Increases in interest rates, labor shortages, supply chain disruptions, high inflation and increased volatility in public equity and fixed income markets have led to increased costs and limited the availability of capital.
Current wording
Our operations have been and are expected to continue to be impacted by economic and market conditions. Increases in interest rates, labor shortages, inflation and increased volatility in public equity and fixed income markets have led to increased costs and limited the availability of capital.
Previous wording
The above factors, together with the impact of COVID-19, have resulted in decreased occupancy and increased operating costs for our tenants and borrowers, which have negatively impacted their operating results and may adversely impact their ability to make full and timely rental payments and debt service payments, respectively, to us. Our Senior Housing - Managed portfolio has been similarly impacted, and we expect that decreased occupancy and increased operating costs will continue to negatively impact the operating results of these investments. While our tenants, borrowers and Senior Housing - Managed portfolio have experienced increases in occupancy, certain of those occupancy rates are still below pre-pandemic levels. Similarly, while our tenants, borrowers and Senior Housing - Managed portfolio have more recently experienced small, incremental improvements in both labor availability and overall labor costs, labor supply remains lower and costs remain higher than pre-pandemic levels. In some cases, we may have to restructure or temporarily defer tenants’ long-term rent obligations and may not be able to do so on terms that are as favorable to us as those currently in place. Reduced or modified rental and debt service amounts could result in the determination that the full amounts of our investments are not recoverable, which could result in an impairment charge. If our tenants and borrowers default on these obligations, such defaults could materially and adversely affect our results of operations and liquidity, in addition to resulting in potential impairment charges. Further, prolonged deterioration in the operating results for our investments in our Senior Housing - Managed portfolio could result in the determination that the full amounts of our investments are not recoverable, which could result in an impairment charge.
Current wording
The above factors, together with the impact of COVID-19, have resulted in decreased occupancy and increased operating costs for our tenants and borrowers, which have negatively impacted their operating results and may adversely impact their ability to make full and timely rental payments and debt service payments, respectively, to us. Our Senior Housing - Managed portfolio has been similarly impacted, and we expect that decreased occupancy and increased operating costs will continue to negatively impact the operating results of these investments. While our tenants, borrowers and Senior Housing - Managed portfolio have experienced increases in occupancy, certain of those occupancy rates are still below pre-pandemic levels. On the labor front, our tenants, borrowers and Senior Housing - Managed portfolio have significantly reduced their reliance on agency staffing, which was a mainstay in the wake of COVID-19, and while they continue to experience improvements in both permanent labor availability and overall costs from the worst point of the pandemic, permanent labor supply remains lower and costs remain higher than pre-pandemic levels. We are, however, encouraged by increases our tenants are receiving in reimbursement rates in our skilled nursing/transitional care portfolio, as those increases have led to margin recovery despite occupancy being below pre-pandemic levels.
Previous wording
During the year ended December 31, 2023, we acquired two skilled nursing/transitional care facilities, one Senior Housing - Leased community and one Senior Housing - Managed community for aggregate consideration of $90.4 million, including acquisition costs. See Note 3, “Recent Real Estate Acquisitions,” in the Notes to Consolidated Financial Statements for additional information regarding these acquisitions.
Current wording
During the year ended December 31, 2024, we acquired three Senior Housing - Managed communities and one Senior Housing - Leased community for aggregate consideration of $136.4 million, including acquisition costs. See Note 3, “Recent Real Estate Acquisitions (Consolidated),” in the Notes to Consolidated Financial Statements for additional information regarding these acquisitions.
Previous wording
During the year ended December 31, 2023, we completed the sale of 25 skilled nursing/transitional care facilities (including one leased to a tenant under a sales-type lease) and four senior housing communities for aggregate consideration, net of closing costs, of $281.2 million. The net carrying value of the assets and liabilities of these facilities was $357.8 million, which resulted in an aggregate $76.6 million net loss on sale. We continue to evaluate additional assets for sale as part of our initiative to recycle capital and further improve our portfolio.
Current wording
During the year ended December 31, 2024, we completed the sale of 17 skilled nursing/transitional care facilities and one behavioral health facility for aggregate consideration, net of closing costs, of $96.0 million. The net carrying value of the assets and liabilities of these facilities was $93.9 million, which resulted in an aggregate $2.1 million net gain on sale. We continue to evaluate additional assets for sale as part of our initiative to recycle capital and further improve our portfolio quality.
Previous wording
As of December 31, 2023, our investment portfolio consisted of 378 real estate properties held for investment, 14 investments in loans receivable, five preferred equity investments and two investments in unconsolidated joint ventures. As of December 31, 2022, our investment portfolio consisted of 402 real estate properties held for investment, one investment in a sales-type lease, 12 investments in loans receivable, seven preferred equity investments and three investments in unconsolidated joint ventures. In general, we expect that income and expenses related to our portfolio will fluctuate in future periods in comparison to the corresponding prior periods as a result of investment and disposition activity and anticipated future changes in our portfolio. The results of operations presented are not directly comparable due to ongoing acquisition and disposition activity, including our capital recycling initiative.
Current wording
As of December 31, 2024, our investment portfolio consisted of 364 real estate properties held for investment, 14 investments in loans receivable, five preferred equity investments and two investments in unconsolidated joint ventures. As of December 31, 2023, our investment portfolio consisted of 378 real estate properties held for investment, 14 investments in loans receivable, five preferred equity investments and two investments in unconsolidated joint ventures. In general, we expect that income and expenses related to our portfolio will fluctuate in future periods in comparison to the corresponding prior periods as a result of investment and disposition activity and anticipated future changes in our portfolio. The results of operations presented are not directly comparable due to ongoing acquisition and disposition activity, including our capital recycling initiative.
Previous wording
During the year ended December 31, 2023, we recognized $376.3 million of rental income compared to $400.6 million for the year ended December 31, 2022. The $24.3 million net decrease in rental income is related to (i) a $19.5 million decrease from properties disposed of after January 1, 2022,(ii)a $10.1 million decrease from properties that were transitioned to new operators, (iii)a $7.9 million decrease in earned cash rents and operating expense recoveries related to leases that are no longer accounted for on an accrual basis, (iv) a $7.4 million decrease in Genesis excess rents in accordance with the terms of the memorandum of understanding entered into in 2017 and (v) a $1.3 million decrease from facilities transitioned from triple-net lease to Senior Housing - Managed communities. These decreases are partially offset by (i) a $15.6 million decrease in straight-line rental income receivable write-offs primarily due to the termination of the North American leases in 2022,(ii) a $3.5 million increase due to lease amendments and annual rental increases based on changes in the Consumer Price Index, (iii) a $2.2 million increase from properties acquired after January 1, 2022 and (iv) a $1.1 million increase due to incremental revenue related to capital expenditures.
Current wording
During the year ended December 31, 2024, we recognized $381.5 million of rental income compared to $376.3 million for the year ended December 31, 2023. The $5.2 million net increase in rental income is related to (i) a $6.8 million net increase in rental and related revenues related to leases that are no longer accounted for on an accrual basis, (ii) a $6.2 million increase from properties acquired after January 1, 2023, (iii) a $2.4 million increase due to incremental revenue related to capital expenditures, (iv) a $2.2 million increase due to lease amendments and annual rental increases based on changes in the Consumer Price Index and (v) a $1.6 million increase from properties that were transitioned to new operators. These increases are partially offset by (i) an $8.5 million decrease from properties disposed of after January 1, 2023, (ii) a $2.9 million increase in cash and non-cash rent receivable write-offs related to leases that are no longer accounted for on an accrual basis, (iii) a $1.1 million decrease in Genesis excess rents in accordance with the terms of the memorandum of understanding entered into with
Previous wording
During the year ended December 31, 2023, we recognized $236.2 million of resident fees and services compared to $186.7 million for the year ended December 31, 2022. The $49.5 million increase is due to(i) a $23.6 million increase related to nine facilities that were transitioned to Senior Housing - Managed communities after January 1, 2022, (ii) a $20.9 million increase from four Senior Housing - Managed communities acquired after January 1, 2022 and (iii) a $10.3 million increase related to increased occupancy and an increase in rates. These increases are partially offset bya $3.8 million decrease related to one community that was closed due to a fire and a $1.5 million decrease related to one Senior Housing - Managed community disposed of after January 1, 2022.
Current wording
During the year ended December 31, 2024, we recognized $284.6 million of resident fees and services compared to $236.2 million for the year ended December 31, 2023. The $48.4 million net increase is due to(i) a $21.8 million increase related to seven facilities that were transitioned to Senior Housing - Managed communities after January 1, 2023, (ii) a $15.1 million increase related to increased occupancy and an increase in rates and (iii) an $11.9 million increase from four Senior Housing - Managed communities acquired after January 1, 2023. These increases are partially offset by a $0.4 million decrease related to one Senior Housing - Managed community disposed of after January 1, 2023.
Previous wording
Interest and other income primarily consists of income earned on our loans receivable investments and preferred returns earned on our preferred equity investments. During the year ended December 31, 2023, we recognized $35.1 million of interest and other income compared to $37.6 million for the year ended December 31, 2022. The net decrease of $2.5 million is due to a $4.0 million decrease in income from investments repaid after January 1, 2022 and $2.5 million lease termination payments primarily related to one skilled nursing/transitional care facility that sold in 2022, partially offset by (i) a $2.8 million increase from investments made after January 1, 2022, (ii) a $0.6 million increase due to increased fundings for existing investments and (iii) a $0.6 million increase in bank interest income.
Current wording
Interest and other income primarily consists of income earned on our loans receivable investments and preferred returns earned on our preferred equity investments. During the year ended December 31, 2024, we recognized $37.2 million of interest and other income compared to $35.1 million for the year ended December 31, 2023. The net increase of $2.1 million is due to (i) a $1.5 million increase from investments made after January 1, 2023, (ii) a $0.7 million increase due to increased fundings for existing investments, (iii) a $0.4 million increase in bank interest income and (iv) a $0.2 million lease termination payment primarily related to one skilled nursing/transitional care facility that was sold during 2024, partially offset by a $0.7 million decrease in income from investments repaid after January 1, 2023.
Previous wording
During the year ended December 31, 2023, we incurred $183.1 million of depreciation and amortization expense compared to $187.8 million for the year ended December 31, 2022. The $4.7 million net decrease is due to a $12.9 million decrease from properties disposed of after January 1, 2022 and an $8.8 million decrease due to assets that have been fully depreciated. The decreases are offset by (i) a $7.7 million increase due to accelerating the remaining useful life of a facility that was demolished, (ii) a $6.3 million increase from properties acquired after January 1, 2022 and (iii) a $3.0 million increase from additions to real estate.
Current wording
During the year ended December 31, 2024, we incurred $169.6 million of depreciation and amortization expense compared to $183.1 million for the year ended December 31, 2023. The net decrease of $13.5 million is due to (i) an $8.1 million decrease due to accelerating the remaining useful life of a facility that was demolished in 2023, (ii) a $6.3 million decrease due to assets that have been fully depreciated and (iii) a $5.9 million decrease from properties disposed of after January 1, 2023. These decreases are partially offset by a $4.9 million increase from properties acquired after January 1, 2023 and a $1.9 million increase from additions to real estate.
Previous wording
We incur interest expense comprised of costs of borrowings plus the amortization of deferred financing costs related to our indebtedness. During the year ended December 31, 2023, we incurred $113.0 million of interest expense compared to $105.5 million for the year ended December 31, 2022. The $7.5 million net increase is primarily related to borrowings outstanding under the Credit Agreement and an increase in interest rates.
Current wording
We incur interest expense comprised of costs of borrowings plus the amortization of deferred financing costs related to our indebtedness. During the year ended December 31, 2024, we incurred $115.3 million of interest expense compared to $113.0 million for the year ended December 31, 2023. The $2.3 million net increase is primarily related toa $4.1 million increase in interest expense related to borrowings under the Credit Agreement, partially offset by a $1.8 million decrease in non-cash interest expense related to our interest rate hedges.
Previous wording
During the year ended December 31, 2023, we recognized $17.9 million of triple-net portfolio operating expenses compared to $19.6 million for the year ended December 31, 2022. The $1.7 million net decrease is related toa $1.2 million decrease due to properties disposed of after January 1, 2022, a $0.8 million net decrease due to facilities that have since transitioned to new operators who are now paying the property taxes directly and the remaining change is due to adjusting our estimates related to property taxes.
Current wording
During the year ended December 31, 2024, we recognized $17.1 million of triple-net portfolio operating expenses compared to $17.9 million for the year ended December 31, 2023. The $0.9 million net decrease is primarily due to a $1.3 million decrease due tofacilities that have since transitioned to new operators who are now paying the property taxes directlyand a $0.4 million decrease from properties disposed of after January 1, 2023. The decreases are partially offset by an $0.8 million increase due toadjustments to our estimates related to property taxes.
Previous wording
During the year ended December 31, 2023, we recognized $177.3 million of Senior Housing - Managed portfolio operating expenses compared to $143.0 million for the year ended December 31, 2022. The $34.3 million net increase is due to (i) a $22.3 million increase related to nine facilities that were transitioned to Senior Housing - Managed communities after January 1, 2022, (ii) a $12.9 million increase related to four Senior Housing - Managed communities acquired after January 1, 2022, (iii) a $1.5 million increase in employee compensation primarily due to incre ased labor rates and staffing and (iv) a $0.6 million increase in dining expenses primarily due to increased occupancy. These increases are partially offset by a $2.2 million decrease in operating expenses related to one community that was closed due to a fire and a $1.7 million decrease related to one Senior Housing - Managed community disposed of after January 1, 2022.
Current wording
During the year ended December 31, 2024, we recognized $210.0 million of Senior Housing - Managed portfolio operating expenses compared to $177.3 million for the year ended December 31, 2023. The $32.7 million net increase is due to (i) a $19.1 million increase related to seven facilities that were transitioned to Senior Housing - Managed communities after January 1, 2023, (ii) a $6.9 million increase related to four Senior Housing - Managed communities acquired after January 1, 2023, (iii) a $3.1 million increase in employee compensation primarily due to increased labor rates and staffing, (iv) a $2.1 million increase in management fees, dining expenses and housekeeping costs due to increased occupancy, (v) a $1.4 million increase in marketing, administrative and corporate overhead expenses and (vi) a $0.4 million increase in taxes primarily due to changes in estimates. These increases are partially offset by a $0.4 million decrease related to one Senior Housing - Managed community disposed of after January 1, 2023.
Previous wording
General and administrative expenses include compensation-related expenses as well as professional services, office costs, other costs associated with asset management, and merger and acquisition costs. During the year ended December 31, 2023, general and administrative expenses were $47.5 million compared to $39.6 million during the year ended December 31, 2022. The $7.9 million net increase is related to (i) a $6.7 million increase in compensation, including a $0.5 increase in stock-based compensation, for our teammates as a result of changes in performance-based payout assumptions on management compensation, increased staffing and annual salary adjustments, (ii) a $0.7 million increase in insurance premiums and (iii) a $0.4 million increase in conference and travel expenses primarily related to the 2023 Sabra operator conference.
Current wording
General and administrative expenses include compensation-related expenses as well as professional services, office costs, other costs associated with asset management, and acquisition costs. During the year ended December 31, 2024, general and administrative expenses were $50.1 million compared to $47.5 million during the year ended December 31, 2023. The $2.6 million net increase is related to a $3.2 million increase in compensation, including a $1.0 million increase in stock-based compensation, for our teammatesas a result of changes in performance-based payout assumptions on compensation andannual salary adjustments, partially offset by a $0.5 million decrease in insurance expense.
Previous wording
During the years ended December 31, 2023 and 2022, we recognized a $0.2 million and $0.1 million provision for loan losses and other reserves, respectively, associated with our loans receivable investments and sales-type lease that was terminated in March 2023.
Current wording
During the years ended December 31, 2024 and 2023, we recognized a $0.6 million recovery of and a $0.2 million provision for loan losses, respectively, associated with our loans receivable investments.
Previous wording
During the year ended December 31, 2023, we recognized $14.3 million of impairment of real estate related to three skilled nursing/transitional care facilities that have either sold or are closed. During the year ended December 31, 2022, we recognized $94.0 million of impairment of real estate related to ten skilled nursing/transitional care facilities that have sold.
Current wording
During the year ended December 31, 2024, we recognized an $18.5 million impairment of real estate primarily related to six facilities that were sold or are expected to be sold. During the year ended December 31, 2023, we recognized a $14.3 million impairment of real estate related to three facilities that have sold.
Previous wording
During the year ended December 31, 2023, we recognized a $1.5 million loss on extinguishment of debt related to write-offs of deferred financing costs in connection with amending and restating the fifth amended and restated unsecured credit agreement entered into by the Operating Partnership and Sabra Canadian Holdings, LLC and the other parties thereto on September 9, 2019 (“Prior Credit Agreement”). During the year ended December 31, 2022, we recognized a $0.4 million loss on extinguishment of debt related to write-offs of deferred financing costs in connection with the partial pay downs of the U.S. dollar term loan (“Prior Term Loan”) under our Prior Credit Agreement.
Current wording
No loss on extinguishment of debt was recognized during the year ended December 31, 2024. During the year ended December 31, 2023, we recognized a $1.5 million loss on extinguishment of debt related to write-offs of deferred financing costs in connection with amending and restating the fifth amended and restated unsecured credit agreement entered into by the Operating Partnership and Sabra Canadian Holdings, LLC and the other parties thereto on September 9, 2019.
Previous wording
During the year ended December 31, 2023, we recognized $2.6 million of other income related to (i) a $3.7 million gain on insurance proceeds received related to property damage incurred at a vacant facility, (ii) $0.5 million of business interruption insurance income related to one Senior Housing - Managed community that was closed due to a fire and (iii) $0.3 million of income related to the sale of licensed beds. This income is partially offset by $1.5 million of transition-related expenses related to the transition of 14 Senior Housing - Managed communities to new operators in 2023. During the year ended December 31, 2022, we recognized $1.1 million of other expense consisting of a $2.2 million foreign currency transaction loss related to our Canadian borrowings, partially offset by $1.1 million of other income related to settlement payments received related to legacy Care Capital Properties investments.
Current wording
During the year ended December 31, 2024, we recognized $2.7 million of other income related to insurance proceeds received related to a fire that occurred at one of our Senior Housing - Managed communities, including $1.7 million of business interruption insurance income and a $0.5 million gain on insurance proceeds related to the damage incurred at the facility, and a $0.5 million gain related to our cross currency interest rate swaps. During the year ended December 31, 2023, we recognized $2.6 million of other income related to (i) a $3.7 million gain on insurance proceeds received related to property damage incurred at a vacant facility, (ii) $0.5 million of business interruption insurance income related to one Senior Housing - Managed community that was closed due to a fire and (iii) $0.3 million of income related to the sale of licensed beds. This income is partially offset by $1.5 million of transition-related expenses related to the transition of 14 Senior Housing - Managed communities to new operators in 2023.
Previous wording
Net Loss on Sales of Real Estate
Current wording
Net Gain (Loss) on Sales of Real Estate
Previous wording
During the year ended December 31, 2023, we recognized an aggregate net loss of $76.6 million related to the disposition of 24 skilled nursing/transitional care facilities, three Senior Housing - Leased communities and one Senior Housing - Managed community. During the year ended December 31, 2022, we recognized an aggregate net loss of $12.0 million related to the disposition of 13 skilled nursing/transition care facilities and five Senior Housing - Leased communities.
Current wording
During the year ended December 31, 2024, we recognized an aggregate net gain of $2.1 million related to the disposition of 17 skilled nursing/transitional care facilities and one behavioral health facility. During the year ended December 31, 2023, we recognized an aggregate net loss of $76.6 million related to the disposition of 24 skilled nursing/transitional care facilities, three Senior Housing - Leased communities and one Senior Housing - Managed community.
Previous wording
During the year ended December 31, 2023, we recognized $2.0 million of income tax expense compared to $1.2 million for the year ended December 31, 2022. The $0.8 million increase is due to higher taxable income.
Current wording
During the year ended December 31, 2024, we recognized $1.0 million of income tax expense compared to $2.0 million for the year ended December 31, 2023. The $1.0 million decrease is due to lower taxable income during the year ended December 31, 2024.
Previous wording
We believe that net income as defined by GAAP is the most appropriate earnings measure. We also believe that funds from operations (“FFO”), as defined in accordance with the definition used by the National Association of Real Estate Investment Trusts (“Nareit”), and adjusted funds from operations (“AFFO”) (and related per share amounts) are important non-GAAP supplemental measures of our operating performance. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. Thus, Nareit created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. FFO is defined as net income, computed in accordance with GAAP, excluding gains or losses from real estate dispositions and our share of gains or losses from real estate dispositions related to our unconsolidated joint ventures, plus real estate depreciation and amortization, net of amounts related to noncontrolling interests, plus our share of depreciation and amortization related to our unconsolidated joint ventures, and real estate impairment charges of both consolidated and unconsolidated entities when the impairment is directly attributable to decreases in the value of the depreciable real estate held by the entity. AFFO is defined as FFO excluding merger and acquisition costs, stock-based compensation expense, non-cash rental and related revenues, non-cash interest income, non-cash interest expense, non-cash portion of loss on extinguishment of debt, provision for loan losses and other reserves, non-cash lease termination income and deferred income taxes, as well as other non-cash revenue and expense items (including ineffectiveness gain/loss on derivative instruments, and non-cash revenue and expense amounts related to noncontrolling interests) and our share of non-cash adjustments related to our unconsolidated joint ventures. We believe that the use of FFO and AFFO (and the related per share amounts), combined with the required GAAP presentations, improves the understanding of our operating results among investors and makes comparisons of operating results among REITs more meaningful. We consider FFO and AFFO to be useful measures for reviewing comparative operating and financial performance because, by excluding the applicable items listed above, FFO and AFFO can help investors compare our operating performance between periods or as compared to other companies. While FFO and AFFO are relevant and widely used measures of operating performance of REITs, they do not represent …
Excerpt shortened here; the source contains the full paragraph.
Current wording
We believe that net income as defined by GAAP is the most appropriate earnings measure. We also believe that funds from operations (“FFO”), as defined in accordance with the definition used by the National Association of Real Estate Investment Trusts (“Nareit”), and adjusted funds from operations (“AFFO”) (and related per share amounts) are important non-GAAP supplemental measures of our operating performance. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. Thus, Nareit created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. FFO is defined as net income, computed in accordance with GAAP, excluding gains or losses from real estate dispositions and our share of gains or losses from real estate dispositions related to our unconsolidated joint ventures, plus real estate depreciation and amortization, net of amounts related to noncontrolling interests, plus our share of depreciation and amortization related to our unconsolidated joint ventures, and real estate impairment charges of both consolidated and unconsolidated entities when the impairment is directly attributable to decreases in the value of the depreciable real estate held by the entity. AFFO is defined as FFO excluding stock-based compensation expense, non-cash rental and related revenues, non-cash interest income, non-cash interest expense, non-cash portion of loss on extinguishment of debt, provision for (recovery of) loan losses and other reserves, non-cash lease termination income and deferred income taxes, as well as other non-cash revenue and expense items (including noncapitalizable acquisition costs, transaction costs related to operator transitions and organizational or other restructuring activities, ineffectiveness gain/loss on derivative instruments, and non-cash revenue and expense amounts related to noncontrolling interests) and our share of non-cash adjustments related to our unconsolidated joint ventures. We believe that the use of FFO and AFFO (and the related per share amounts), combined with the required GAAP presentations, improves the understanding of our operating results among investors and makes comparisons of operating results among REITs more meaningful. We consider FFO and AFFO to be useful measures for reviewing comparative operating and financial performance because, by excluding the applicable items listed above, FFO and AFFO can help investors compare our operating performance between periods or as compared to other c…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
As of December 31, 2023, we had approximately $946.9 million in liquidity, consisting of unrestricted cash and cash equivalents of $41.3 million and available borrowings under our Revolving Credit Facility of $905.6 million. The Credit Agreement also contains an accordion feature that can increase the total available borrowings to $2.75 billion (from U.S. $1.4 billion plus CAD $150.0 million), subject to terms and conditions.
Current wording
As of December 31, 2024, we had approximately $980.0 million in liquidity, consisting of unrestricted cash and cash equivalents of $60.5 million, available borrowings under our Revolving Credit Facility of $893.4 million and $26.1 million related to shares outstanding under forward sale agreements under our ATM Program. The Credit Agreement also contains an accordion feature that can increase the total available borrowings to $2.75 billion (from U.S. $1.4 billion plus CAD $150.0 million), subject to terms and conditions.
Previous wording
During the year ended December 31, 2023, no shares were sold under the ATM Program and we did not utilize the forward feature of the ATM Program. As of December 31, 2023, we had $500.0 million available under the ATM Program.
Current wording
No other shares were sold under the ATM Program during the year ended December 31, 2024.
Previous wording
Net cash provided by operating activities was $300.6 million for the year ended December 31, 2023. Operating cash inflows were derived primarily from the rental payments received under our lease agreements, resident fees and services net of the corresponding operating expenses, and interest payments from borrowers under our loan and preferred equity investments. Operating cash outflows consisted primarily of interest payments on borrowings and payment of general and administrative expenses, including corporate overhead. Increases to operating cash flows primarily relate to completed investment activity, and decreases to operating cash flows primarily relate to disposition activity and interest expense from increased borrowing activity and higher interest rates. In addition, the change in operating cash flows was impacted by the timing of collections from our tenants and borrowers and fluctuations in the operating results of our Senior Housing - Managed communities. We expect our annualized cash flows provided by operating activities to fluctuate as a result of such activity.
Current wording
Net cash provided by operating activities was $310.5 million for the year ended December 31, 2024. Operating cash inflows were derived primarily from the rental payments received under our lease agreements, resident fees and services net of the corresponding operating expenses, and interest payments from borrowers under our loan and preferred equity investments. Operating cash outflows consisted primarily of interest payments on borrowings and payment of general and administrative expenses, including corporate overhead. Increases to operating cash flows primarily relate to completed investment activity, and decreases to operating cash flows primarily relate to disposition activity and interest expense from increased borrowing activity and higher interest rates. In addition, the change in operating cash flows was impacted by the timing of collections from our tenants and borrowers and fluctuations in the operating results of our Senior Housing - Managed communities. We expect our annualized cash flows provided by operating activities to fluctuate as a result of such activity.
Previous wording
During the year ended December 31, 2023, net cash provided by investing activities was $103.1 million and included $247.6 million of net proceeds from the sales of real estate, $25.5 million of net proceeds from the sale of a facility under a sales-type lease, $9.3 million in repayments of loans receivable, $5.8 million in insurance proceeds, $5.5 million in repayments of preferred equity investments and $0.5 million of distributions in excess of earnings from an unconsolidated joint venture, partially offset by $84.9 million used for additions to real estate, $78.5 million used for the acquisition of four facilities, $11.4 million used to provide funding for loans receivable, $11.0 million used to provide funding for preferred equity investments and $5.2 million used for the investment in an unconsolidated joint venture.
Current wording
During the year ended December 31, 2024, net cash used in investing activities was $109.0 million and included $136.4 million used for the acquisition of four facilities, $54.7 million used for additions to real estate, $21.6 million used to provide funding for loans receivable, $2.8 million used to provide funding for a preferred equity investment and $1.3 million used for the investment in an unconsolidated joint venture, partially offset by $96.0 million of net proceeds from the sales of real estate, $5.9 million in repayments of preferred equity investments, $3.6 million in repayments of loans receivable and $2.4 million in insurance proceeds.
Previous wording
During the year ended December 31, 2023, net cash used in financing activities was $410.3 million and included $277.4 million of dividends paid to stockholders, $104.3 million of net repayments of our Revolving Credit Facility, $18.1 million of payments of deferred financing costs related to the Credit Agreement, $17.9 million of payments of contingent consideration,
Current wording
During the year ended December 31, 2024, net cash used in financing activities was $181.6 million and included $280.2 million of dividends paid to stockholders, $2.0 million of principal repayments on secured debt and $0.1 million of payments of deferred financing costs related to the Credit Agreement, partially offset by $86.1 million of proceeds from shares sold through our ATM Program, net of related costs and payroll costs related to the issuance of common stock pursuant to equity compensation arrangements, and $14.6 million of net proceeds from our Revolving Credit Facility.
Previous wording
(1)Principal balance does not include discount, net of $4.3 million and deferred financing costs, net of $10.5 million as of December 31, 2023.
Current wording
(1)Principal balance does not include discount, net of $5.0 million and deferred financing costs, net of $9.0 million as of December 31, 2024.
Previous wording
The obligations of the Borrowers under the Credit Agreement are fully and unconditionally guaranteed, jointly and severally, on an unsecured basis, by us and one of our non-operating subsidiaries, subject to release under certain customary circumstances.
Current wording
The obligations of the Borrowers under the Credit Agreement are guaranteed by us and certain of our subsidiaries.
Previous wording
Interest. Our estimated interest and facility fee payments based on principal amounts of debt outstanding as of December 31, 2023, applicable interest rates in effect as of December 31, 2023, and including the impact of interest rate swaps and collars are $102.2 million in 2024, $103.5 million in 2025, $103.5 million in 2026, $66.1 million in 2027, $40.6 million in 2028 and $100.9 million thereafter.
Current wording
Interest. Our estimated interest and facility fee payments based on principal amounts of debt outstanding as of December 31, 2024, applicable interest rates in effect as of December 31, 2024, and including the impact of interest rate swaps are $102.8 million in 2025, $102.7 million in 2026, $65.8 million in 2027, $40.6 million in 2028, $40.3 million in 2029 and $60.6 million thereafter.
Previous wording
Capital Expenditures and Other Expenditures and Funding Commitments. For the years ended December 31, 2023 and 2022 and 2021, our aggregate capital expenditures were $84.9 million, $54.5 million and $42.7 million, respectively. As of December 31, 2023, our aggregate commitment for future capital and other expenditures related to facilities leased under triple-net operating leases was approximately $27 million, of which $20 million will directly result in incremental rental income, and approximately $16 million will be spent over the next 12 months. We also expect to fund capital expenditures related to our Senior Housing - Managed communities.
Current wording
Capital and Other Expenditures and Funding Commitments. For the years ended December 31, 2024, 2023 and 2022, our aggregate capital expenditures were $54.7 million, $84.9 million and $54.5 million, respectively. As of December 31, 2024, our aggregate commitment for future capital and other expenditures related to facilities leased under triple-net operating leases was approximately $16 million, of which $13 million will directly result in incremental rental income, and approximately $6 million will be spent over the next 12 months. We also expect to fund capital expenditures related to our Senior Housing - Managed communities.
Previous wording
In addition, as of December 31, 2023, we have committed to provide up to $0.5 million of future funding related to one loan receivable investment.
Current wording
In addition, as of December 31, 2024, we have committed to provide up to $1.4 million of future funding related to two loan receivable investments.
Previous wording
We paid dividends of $277.4 million on our common stock during the year ended December 31, 2023. On February 1, 2024, our board of directors declared a quarterly cash dividend of $0.30 per share of common stock. The dividend will be paid on February 29, 2024 to common stockholders of record as of February 13, 2024.
Current wording
We paid dividends of $280.2 million on our common stock during the year ended December 31, 2024. On February 3, 2025, our board of directors declared a quarterly cash dividend of $0.30 per share of common stock. The dividend will be paid on February 28, 2025 to common stockholders of record as of February 14, 2025.
Previous wording
Management believes our current portfolio is reasonably diversified across healthcare related real estate and geographical location and does not contain any other significant concentration of credit risks. Our portfolio of 378 real estate properties held for investment as of December 31, 2023 is diversified by location across the U.S. and Canada.
Current wording
Management believes our current portfolio is reasonably diversified across healthcare related real estate and geographical location and does not contain any other significant concentration of credit risks. Our portfolio of 364 real estate properties held for investment as of December 31, 2024 is diversified by location across the U.S. and Canada.
Previous wording
For the year ended December 31, 2023, 42.0% of our revenues was derived directly or indirectly from skilled nursing/transitional care facilities. Medicare reimburses skilled nursing facilities for Medicare Part A services under the Prospective Payment System (“PPS”), as implemented pursuant to the Balanced Budget Act of 1997 and modified pursuant to subsequent laws, most recently the Patient Protection and Affordable Care Act of 2010. PPS regulations predetermine a payment amount per patient, per day, based on a market basket index calculated for all covered costs.
Current wording
For the year ended December 31, 2024, 39.2% of our revenues was derived directly or indirectly from skilled nursing/transitional care facilities. Medicare reimburses skilled nursing facilities for Medicare Part A services under the Prospective Payment System (“PPS”), as implemented pursuant to the Balanced Budget Act of 1997 and modified pursuant to subsequent laws, most recently the Patient Protection and Affordable Care Act of 2010. PPS regulations predetermine a payment amount per patient, per day, based on a market basket index calculated for all covered costs.
Previous wording
On July 29, 2022, CMS issued a final rule regarding fiscal year 2023 Medicare rates for skilled nursing facilities providing an estimated net increase of 2.7% compared to fiscal year 2022 comprised of an increase as a result of an update to the payment rates of 5.1% (which is based on (i) a market basket increase of 3.9% plus (ii) a market basket forecast error adjustment of 1.5% and less (iii) a productivity adjustment of 0.3%), partially offset by the recalibrated PDPM parity adjustment of 2.3% (the total PDPM parity adjustment is 4.6%, and it is being phased in over a two-year period). These figures do not incorporate any of the estimated value-based purchasing reductions for skilled nursing facilities. The new payment rates became effective on October 1, 2022.
Current wording
On July 31, 2024, CMS issued a final rule regarding fiscal year 2025 Medicare rates for skilled nursing facilities providing an estimated net increase of 4.2% compared to fiscal year 2024 (comprised of (i) a market basket increase of 3.0% plus (ii) a market basket forecast error adjustment of 1.7% and less (iii) a productivity adjustment of 0.5%). These figures do not incorporate any of the estimated value-based purchasing reductions for skilled nursing facilities. The new payment rates became effective on October 1, 2024. Additionally, the proposed rule expands the civil monetary penalties (“CMP”) that can be imposed for noncompliance to allow for more CMPs per instance and per day.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
In some cases, we may have to restructure or temporarily defer tenants’ long-term rent obligations and may not be able to do so on terms that are as favorable to us as those currently in place. Reduced or modified rental and debt service amounts could result in the determination that the full amounts of our investments are not recoverable, which could result in an impairment charge. If our tenants and borrowers default on these obligations, such defaults could materially and adversely affect our results of operations and liquidity, in addition to resulting in potential impairment charges. Further, prolonged deterioration in the operating results for our investments in our Senior Housing - Managed portfolio could result in the determination that the full amounts of our investments are not recoverable, which could result in an impairment charge.
Current report — wording carried from elsewhere
Genesis in 2017 and (iv) a $1.1 million decrease from facilities transitioned from triple-net leases to Senior Housing - Managed communities.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
On February 23, 2023, we established the ATM Program (as defined below) pursuant to which shares of our common stock having an aggregate gross sales price of up to $500.0 million may be sold from time to time. See “—Liquidity and Capital Resources.”
Previous report — wording carried elsewhere
Provision for Loan Losses and Other Reserves
Previous report — wording carried elsewhere
$2.7 million of net costs related to payroll tax payments related to the issuance of common stock pursuant to equity compensation arrangements and our ATM Program and $2.0 million of principal repayments on secured debt, partially offset by $12.2 million of proceeds from Term Loans.