Sabra Health Care to buy care facilities in Maryland for $234 million
Staff writer ▼ | June 25, 2015
Sabra Health Care REIT has agreed to purchase a portfolio of four transitional care facilities located in Maryland.Article continues below
Sabra agreed to acquire four skilled nursing facilities that specialize in transitional care and medically complex post-surgical, ventilator and dialysis patients with a total of 678 licensed beds (NMS Portfolio) located in Maryland for $234 million.
Upon completion of the acquisition, Sabra and the current operator will enter into a triple-net master lease agreement on three of the facilities and enter into a triple-net lease agreement on the fourth facility which is encumbered by a HUD loan.
Each of the master lease and the lease for the fourth facility will have an initial term of 15 years with two 10-year renewal options and annual rent escalators equal to the greater of 2.50% or CPI, but not to exceed 2.75%.
The leases are collectively expected to generate annual lease revenues determined in accordance with GAAP of $24.5 million and an initial yield on cash rent of 8.75%. Closing on the acquisition of three of the facilities, with an allocated purchase price of $175.2 million, is expected to occur on or before June 30, 2015.
The fourth facility is expected to close upon the assumption of an existing $10.8 million HUD loan having an interest rate of 5.60% per annum. The closing of the acquisition of the NMS Portfolio is subject to customary conditions, including the satisfactory completion by Sabra of its due diligence and, as to the fourth facility, the HUD loan assumption.
In addition to the HUD loan assumption, Sabra expects to fund the remainder of the acquisition with available cash and proceeds from their revolving credit facility. After giving effect to the completion of the NMS Portfolio acquisition, Sabra's total investments year to date for 2015 would be $406.5 million, with a blended cash yield of 7.89%. ■ What to read next
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