SUMMARIZED CONDENSED CONSOLIDATING INFORMATION

In connection with the offering of the Senior Notes by the Issuers in October 2010, the Company and certain 100% owned subsidiaries of the Company (the “Guarantors”) have, jointly and severally, fully and unconditionally guaranteed the Senior Notes, subject to release under certain customary circumstances as described below. These guarantees are subordinated to all existing and future senior debt and senior guarantees of the Guarantors and are unsecured. The Company conducts all of its business through and derives virtually all of its income from its subsidiaries. Therefore, the Company’s ability to make required payments with respect to its indebtedness (including the Senior Notes) and other obligations depends on the financial results and condition of its subsidiaries and its ability to receive funds from its subsidiaries.

A Guarantor will be automatically and unconditionally released from its obligations under the guarantees with respect to the Senior Notes in the event of:


•	Any sale of the subsidiary Guarantor or of all or substantially all of its assets;


•	A merger or consolidation of a subsidiary Guarantor with an issuer of the Senior Notes or another Guarantor, provided that the surviving entity remains a Guarantor;


•	A subsidiary Guarantor is declared "unrestricted" for covenant purposes under the Indenture;


•	The requirements for legal defeasance or covenant defeasance or to discharge the Indenture have been satisfied;


•	A liquidation or dissolution, to the extent permitted under the Indenture, of a subsidiary Guarantor; and


•	The release or discharge of the guaranty that resulted in the creation of the subsidiary guaranty, except a discharge or release by or as a result of payment under such guaranty.

Pursuant to Rule 3-10 of Regulation S-X, the following summarized consolidating information is provided for the Company (the “Parent Company”), the Issuers, the Guarantors, and the Company’s non-Guarantor subsidiaries with respect to the Senior Notes. This summarized financial information has been prepared from the books and records maintained by the Company, the Issuers, the Guarantors and the non-Guarantor subsidiaries. The summarized financial information may not necessarily be indicative of the results of operations or financial position had the Issuers, the Guarantors or non-Guarantor subsidiaries operated as independent entities. Sabra’s investments in its consolidated subsidiaries are presented based upon Sabra's proportionate share of each subsidiary's net assets. The Guarantor subsidiaries’ investments in the non-Guarantor subsidiaries and non-Guarantor subsidiaries’ investments in Guarantor subsidiaries are presented under the equity method of accounting. Intercompany activities between subsidiaries and the Parent Company are presented within operating activities on the condensed consolidating statement of cash flows.

Condensed consolidating financial statements for the Company and its subsidiaries, including the Parent Company only, the Issuers, the combined Guarantor subsidiaries and the combined non-Guarantor subsidiaries, are as follows:

CONDENSED CONSOLIDATING BALANCE SHEET

March 31, 2012

(in thousands, except share and per share amounts)

(unaudited)



	Parent Company			Issuers		Combined Guarantor Subsidiaries		Combined Non- Guarantor Subsidiaries		Elimination			Consolidated
Assets
Real estate investments, net of accumulated depreciation	$	175		$	—	$	498,583	$	181,877	$	—		$	680,635
Cash and cash equivalents	1,634			—		—		1,041		—			2,675
Restricted cash	—			—		—		6,664		—			6,664
Deferred tax assets	25,540			—		—		—		—			25,540
Prepaid expenses, deferred financing costs and other assets	995			4,893		22,211		2,932		—			31,031
Intercompany	1,049			145,017		—		27,634		(173,700		)	—
Investment in subsidiaries	322,261			404,968		24,195		—		(751,424		)	—
Total assets	$	351,654		$	554,878	$	544,989	$	220,148	$	(925,124	)	$	746,545
Liabilities and stockholders’ equity
Mortgage notes payable	$	—		$	—	$	—	$	157,603	$	—		$	157,603
Senior unsecured notes payable	—			225,000		—		—		—			225,000
Accounts payable and accrued liabilities	5,516			7,617		3,805		866		—			17,804
Tax liability	25,540			—		—		—		—			25,540
Intercompany	—			—		173,700		—		(173,700		)	—
Total liabilities	31,056			232,617		177,505		158,469		(173,700		)	425,947
Stockholders’ equity:
Preferred stock, $.01 par value; 10,000,000 shares authorized, zero shares issued and outstanding as of March 31, 2012	—			—		—		—		—			—
Common stock, $.01 par value; 125,000,000 shares authorized, 37,009,602 shares issued and outstanding as of March 31, 2012	370			—		—		—		—			370
Additional paid-in capital	346,827			289,452		316,978		52,313		(658,743		)	346,827
Cumulative distributions in excess of net income	(26,599		)	32,809		50,506		9,366		(92,681		)	(26,599		)
Total stockholders’ equity	320,598			322,261		367,484		61,679		(751,424		)	320,598
Total liabilities and stockholders’ equity	$	351,654		$	554,878	$	544,989	$	220,148	$	(925,124	)	$	746,545

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2011

(in thousands, except share and per share amounts)



	Parent Company			Issuers		Combined Guarantor Subsidiaries		Combined Non- Guarantor Subsidiaries		Elimination			Consolidated
Assets
Real estate investments, net of accumulated depreciation	$	187		$	—	$	474,256	$	183,934	$	—		$	658,377
Cash and cash equivalents	41,736			—		—		514		—			42,250
Restricted cash	—			—		—		6,093		—			6,093
Deferred tax assets	25,540			—		—		—		—			25,540
Prepaid expenses, deferred financing costs and other assets	874			5,079		8,544		2,893		—			17,390
Intercompany	—			145,018		—		25,237		(170,255		)	—
Investment in subsidiaries	313,181			391,131		23,611		—		(727,923		)	—
Total assets	$	381,518		$	541,228	$	506,411	$	218,671	$	(898,178	)	$	749,650
Liabilities and stockholders’ equity
Mortgage notes payable	$	—		$	—	$	—	$	158,398	$	—		$	158,398
Senior unsecured notes payable	—			225,000		—		—		—			225,000
Accounts payable and accrued liabilities	6,296			3,047		4,107		689		—			14,139
Tax liability	25,540			—		—		—		—			25,540
Intercompany	23,109			—		147,146		—		(170,255		)	—
Total liabilities	54,945			228,047		151,253		159,087		(170,255		)	423,077
Stockholders’ equity:
Preferred stock, $.01 par value; 10,000,000 shares authorized, zero shares issued and outstanding as of December 31, 2011	—			—		—		—		—			—
Common stock, $.01 par value; 125,000,000 shares authorized, 36,891,712 shares issued and outstanding as of December 31, 2011	369			—		—		—		—			369
Additional paid-in capital	344,995			288,665		316,011		52,110		(656,786		)	344,995
Cumulative distributions in excess of net income	(18,791		)	24,516		39,147		7,474		(71,137		)	(18,791		)
Total stockholders’ equity	326,573			313,181		355,158		59,584		(727,923		)	326,573
Total liabilities and stockholders’ equity	$	381,518		$	541,228	$	506,411	$	218,671	$	(898,178	)	$	749,650

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the Three Months Ended March 31, 2012

(in thousands, except share and per share amounts)

(unaudited)



	Parent Company			Issuers			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries		Elimination			Consolidated
Revenues:
Rental income	$	—		$	—		$	17,215		$	6,448	$	—		$	23,663
Interest income	6			—			58			—		—			64
Total revenues	6			—			17,273			6,448		—			23,727
Expenses:
Depreciation and amortization	12			—			5,232			2,059		—			7,303
Interest	—			4,757			463			2,478		—			7,698
General and administrative	3,882			—			419			20		—			4,321
Income in subsidiary	(8,293		)	(13,050		)	(202		)	—		21,545			—
Total expenses	(4,399		)	(8,293		)	5,912			4,557		21,545			19,322
Net income	$	4,405		$	8,293		$	11,361		$	1,891	$	(21,545	)	$	4,405
Net income per common share, basic															$	0.12
Net income per common share, diluted															$	0.12
Weighted-average number of common shares outstanding, basic															37,035,970
Weighted-average number of common shares outstanding, diluted															37,058,886

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the Three Months Ended March 31, 2011

(in thousands, except share and per share amounts)

(unaudited)



	Parent Company			Issuers			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries		Elimination			Consolidated
Revenues:
Rental income	$	—		$	—		$	11,270		$	6,291	$	—		$	17,561
Interest income	28			—			12			—		—			40
Total revenues	28			—			11,282			6,291		—			17,601
Expenses:
Depreciation and amortization	15			—			3,939			2,132		—			6,086
Interest	—			4,749			322			2,526		—			7,597
General and administrative	2,631			—			2			37		—			2,670
Income in subsidiary	(3,866		)	(8,615		)	(94		)	—		12,575			—
Total expenses	(1,220		)	(3,866		)	4,169			4,695		12,575			16,353
Net income	$	1,248		$	3,866		$	7,113		$	1,596	$	(12,575	)	$	1,248
Net income per common share, basic															$	0.05
Net income per common share, diluted															$	0.05
Weighted-average number of common shares outstanding, basic															25,136,140
Weighted-average number of common shares outstanding, diluted															25,211,585

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Three Months Ended March 31, 2012

(in thousands)

(unaudited)



	Parent Company			Issuers		Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Elimination			Consolidated
Net cash provided by operating activities	$	15,369		$	—	$	—		$	1,095		$	—		$	16,464
Cash flows from investing activities:
Acquisitions of real estate	—			—		(29,850		)	—			—			(29,850		)
Origination of note receivable	—			—		(10,103		)	—			—			(10,103		)
Additions to real estate	—			—		(256		)	—			—			(256		)
Investment in Subsidiary	(728		)									728			—
Net cash used in investing activities	(728		)	—		(40,209		)	—			728			(40,209		)
Cash flows from financing activities:
Principal payments on mortgage notes payable	—			—		—			(791		)	—			(791		)
Payments of deferred financing costs	—			—		(2,296		)	(160		)	—			(2,456		)
Payments related to the issuance of common stock	(370		)	—		—			—			—			(370		)
Dividends paid	(12,213		)	—		—			—			—			(12,213		)
Contribution from Parent	—			—		—			728			(728		)	—
Distribution to Parent	—			—		—			(345		)	345			—
Distribution from Subsidiary	345			—		—			—			(345		)	—
Intercompany financing	(42,505		)	—		42,505			—			—			—
Net cash provided by (used in) financing activities	(54,743		)	—		40,209			(568		)	(728		)	(15,830		)
Net decrease in cash and cash equivalents	(40,102		)	—		—			527			—			(39,575		)
Cash and cash equivalents, beginning of period	41,736			—		—			514			—			42,250
Cash and cash equivalents, end of period	$	1,634		$	—	$	—		$	1,041		$	—		$	2,675

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Three Months Ended March 31, 2011

(in thousands)

(unaudited)



	Parent Company			Issuers		Combined Guarantor Subsidiaries		Combined Non- Guarantor Subsidiaries			Elimination		Consolidated
Net cash provided by operating activities	$	8,038		$	—	$	—	$	4,420		$	—	$	12,458
Cash flows from investing activities:
Acquisition of note receivable	(5,329		)	—		—		—			—		(5,329		)
Additions to real estate	(86		)	—		—		—			—		(86		)
Net cash used in investing activities	(5,415		)	—		—		—			—		(5,415		)
Cash flows from financing activities:
Principal payments on mortgage notes payable	—			—		—		(760		)	—		(760		)
Payments of deferred financing costs	(306		)	—		—		—			—		(306		)
Intercompany financing	3,636			—		—		(3,636		)	—		—
Net cash provided by (used in) financing activities	3,330			—		—		(4,396		)	—		(1,066		)
Net decrease in cash and cash equivalents	5,953			—		—		24			—		5,977
Cash and cash equivalents, beginning of period	70,841			—		—		3,392			—		74,233
Cash and cash equivalents, end of period	$	76,794		$	—	$	—	$	3,416		$	—	$	80,210