Sabra Healthcare REIT (NASDAQ:SBRA) executives told investors the company expects continued growth in 2026, citing improving senior housing operating fundamentals, steady leverage, and what management described as a robust investment pipeline that should exceed 2025 volume.
2026 outlook centers on SHOP growth and transition facility improvement
CEO Rick Matros said net operating income (NOI) growth in Sabra’s senior housing operating portfolio (SHOP), excluding transition facilities, is expected to remain “sturdy” in 2026 as it was in 2025. He added that transition facilities—discussed later on the call as the Holiday portfolio—are improving and are expected to contribute to overall SHOP growth as they recover.
- Net income: $0.60–$0.64
- FFO and normalized FFO: $1.49–$1.53
- AFFO and normalized AFFO: $1.55–$1.59
Costa said that at the midpoint, both normalized FFO per share and normalized AFFO per share are expected to increase by approximately 5% over 2025. He emphasized that guidance does not assume any 2026 investment, disposition, or capital markets activity that has not yet been completed.
Among the guidance assumptions, Costa said cash NOI growth for the triple-net portfolio is expected to be low single-digit at the midpoint, consistent with contractual escalators. The company also assumed no additional tenants move onto or off of cash-basis accounting for revenue recognition. For the same-store managed senior housing portfolio, the company expects average full-year cash NOI growth in the low-to-mid teens.
Senior housing results: occupancy gains, margin expansion, and Canada strength
Executive Vice President Darrin described “another solid quarter” in Sabra’s managed senior housing portfolio. He said the total managed portfolio (including non-stabilized communities and joint venture assets at share) posted sequential revenue growth of 15.8% and cash NOI growth of 18.4%, with cash NOI margin expansion of 60 basis points.
In the same-store managed senior housing portfolio (including joint venture assets at share), Darrin reported fourth-quarter year-over-year revenue growth of 6.4%, with Canadian communities up 10%. Same-store occupancy rose 160 basis points year-over-year to 87.9%. He said U.S. occupancy increased 80 basis points to 84.7%, while Canada increased 300 basis points to 94.2%, marking the seventh consecutive quarter Canada’s occupancy was above 90%.
Darrin also highlighted year-over-year fourth-quarter RevPOR growth of 4.2% (Canada up 5.2%) and ExPOR growth of 1.6%, which he said drove cash NOI growth of 12.6% year over year.
In response to analyst questions, management said it expects continued occupancy growth in 2026 and suggested the portfolio could reach the low 90% range, with CEO Matros adding that “mid-90s” is effectively full for a portfolio in aggregate. When asked about Canada’s outsized occupancy gains, management said there was nothing specific, characterizing Canada as further along in the recovery and pointing to lower new supply compared with the U.S.
Investment pipeline: 2025 activity and expectations for higher 2026 volume
Matros said Sabra completed approximately $450 million in investments in 2025. While the company had previously discussed exceeding $500 million, he said a couple of deals moved into 2026 but “no deals fell out,” adding that the company expects to close on everything discussed on the prior call.
Darrin said Sabra invested more than $150 million during the quarter, adding four properties to the managed portfolio. For 2025 investments, he cited an estimated initial cash yield of 7.5% and an average asset age of less than 10 years. He said Sabra closed on an additional $27 million of managed senior housing assets after year-end and has another $220 million of awarded senior housing and $20 million of awarded skilled nursing investments, with most expected to close in the first quarter or early second quarter.
Management repeatedly characterized awarded deals as heavily weighted to SHOP. In response to questions about why skilled nursing investment was limited, executives said skilled nursing opportunities represented a small portion of what the company is seeing and that skilled nursing deals being pursued are largely sourced from existing relationships, with SHOP representing the vast majority of opportunities.
Quarterly financial results, leverage, liquidity, and dividend
For the fourth quarter of 2025, Costa reported normalized FFO per share of $0.36 and normalized AFFO per share of $0.38. In absolute dollars, normalized FFO totaled $91.2 million and normalized AFFO totaled $95.2 million.
He said cash NOI from the triple-net portfolio decreased $1.3 million from the third quarter, while cash NOI from the managed senior housing portfolio increased $5.5 million, resulting in a net sequential cash NOI increase of $4.2 million. Costa attributed the triple-net NOI decline to the transition of four previously triple-net leased senior housing facilities into the managed senior housing portfolio during the third quarter.
On expenses and other items, Costa said:
- Interest and other income was $10.6 million versus $12.7 million in the prior quarter, primarily due to $2.8 million of lease termination income recognized last quarter and backed out of normalized metrics.
- Cash interest expense was $26.6 million, consistent with the prior quarter.
- Cash G&A was $12.5 million versus $9.1 million, driven largely by a performance-based compensation true-up; normalizing for prior-period portions, cash G&A was $10.6 million.
On the balance sheet, Costa said net debt to adjusted EBITDA was 5.00x as of December 31, 2025, in line with the company’s leverage target and down 0.27x from December 31, 2024. He said the cost of permanent debt was 3.92% with a weighted average remaining term of 4.2 years, and the next material maturity is in 2028. Costa added that Sabra has no floating-rate exposure in its permanent capital stack, with the only floating-rate debt being borrowings under the revolving credit facility.
Regarding equity funding, Costa said Sabra issued $206 million on a forward basis under its ATM program during the quarter at an average price of $18.79 per share after commissions. In total, the company had $322.7 million outstanding under forward contracts at an average price of $18.60 per share after commissions, and it settled $40 million of forward contracts to fund quarterly investment activity. Costa said the company expects to use proceeds from the outstanding forwards to close awarded investments on a leverage-neutral basis.
Sabra reported liquidity of approximately $1.2 billion at year-end, consisting of $71.5 million of unrestricted cash and cash equivalents, $782.4 million of revolver capacity, and $322.7 million under forward sales agreements. Costa also noted $483 million remained available under the ATM program as of December 31, 2025.
The company’s board declared a quarterly cash dividend of $0.30 per common share on February 2, 2026, payable February 27, 2026, to stockholders of record as of February 13, 2026. Costa said the dividend represents a payout of 79% of fourth-quarter normalized AFFO per share and is “adequately covered.”
Additional topics: CapEx, loans, regulatory outlook, and competition
On capital spending for SHOP, Costa said maintenance CapEx is expected to be similar to recent disclosed levels, while non-maintenance, non-recurring CapEx is expected to be roughly $20 million to $30 million in 2026.
In response to questions about the company’s loans receivable, management discussed the “RCA loan,” saying conversations are ongoing with Deerfield (the equity sponsor) and the RCA team. Executives said the borrower is servicing the debt and that 2026 guidance assumes the lease remains in place given the maturity is toward the end of the year.
On skilled nursing regulation, Matros said the reimbursement environment is “formulaic” and that outsized Medicaid and Medicare rate increases during and following the pandemic have been tapering. He said 2025 remained “quite robust” but the company expects rates to come down some more before returning closer to historical averages, and he added there was “no dialogue” at the state level around Medicaid rates causing concern.
On acquisition pricing, management said it is seeing cap rate compression as interest in the sector increases and more competition emerges, including private equity. However, executives said the company has still been able to find newer assets in solid markets around the “seven cap range,” and return expectations remain low double-digit IRRs. They also said Sabra has a preferred equity program for development opportunities with double-digit returns, purchase options, and potential “kickers” on the back end, while noting most development still does not “pencil,” though management said it is beginning to see projects that do.
About Sabra Healthcare REIT (NASDAQ:SBRA)
Sabra Healthcare REIT, Inc (NASDAQ: SBRA) is a real estate investment trust that acquires, owns and operates net‐lease healthcare properties. Its diversified portfolio spans senior housing communities, skilled nursing and rehabilitation centers, outpatient medical facilities, medical office buildings, hospitals and life science properties. Sabra structures long‐term, triple‐net lease agreements with healthcare operators, providing stable rental income streams while allowing tenants to focus on patient care and operational excellence.
Serving a broad spectrum of care segments, Sabra’s tenants include both regional and national providers of assisted living, independent living, memory care, post‐acute rehabilitation and research and development laboratories.
