Sabra Health Care REIT announced that it has indefinitely postponed its potential $150 million senior housing investment and does not expect any material acquisitions or other investments in the near future due to the current uncertain environment.
The company’s board of directors has also determined that it is prudent for them to lower the quarterly dividend to $0.30 per share for the dividend expected to be declared in May 2020.
In addition, given the current interest rate environment, the REIT was able to obtain significant cost certainty upon refinancing its 2024 maturities by entering into $225 million notional amount of 10-year interest rate swaps which become effective May 1, 2024 at an average swap rate of 0.97%.
The expected declared reduction in the quarterly dividend would also generate approximately $30 million of cash savings per quarter, which Irvine, California-based Sabra expects to use to manage its leverage and fund operations as needed. Their availability under its revolving credit facility today is $895 million and they have no significant debt maturities until 2024.
“Our focus continues to be on the health and well-being of our employees, tenants, caregivers, and the patients they serve” explained CEO and Chairman Rick Matros. “Preservation of capital is important in times of uncertainty. Retaining a greater portion of our cash flows from operations will help us better manage our leverage as we expect to face disruption in our revenue stream during the pendency of the COVID-19 pandemic.”
He added that Sabra’s operators are diligently and skillfully managing through the pandemic, and the team is pleased with how they have been handling these unprecedented challenges.
“However, it is impossible to predict the ultimate impact on our operators,” he said. “We believe that reducing the quarterly dividend is an appropriate response to enhance the Company’s management of this pandemic. We expect that our Board will re-evaluate the dividend once the pandemic has passed.”
The Sabra Health Care REIT, Inc. through its subsidiaries, owns and invests in real estate serving healthcare industry throughout the United States and Canada.