SUMMARIZED CONSOLIDATING INFORMATION

In connection with the offerings of the Senior Notes by the Issuers, 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 Senior Notes Indentures;


•	The requirements for legal defeasance or covenant defeasance or to discharge the Senior Notes Indentures have been satisfied;


•	A liquidation or dissolution, to the extent permitted under the Senior Notes Indentures, 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.

The Guarantors were also subject to the guarantees described above while the 2018 Notes were outstanding, but such guarantees were released following the redemption of all of the remaining 2018 Notes in the first quarter of the year ended December 31, 2014. As of December 31, 2014, no 2018 Notes were outstanding.

Pursuant to Rule 3-10 of Regulation S-X, the following summarized condensed 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:

CONSOLIDATING BALANCE SHEET

December 31, 2014

(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	$	60	$	—	$	1,505,974	$	139,771		$	—		$	1,645,805
Loans receivable and other investments, net	—		—		251,583		—			—			251,583
Cash and cash equivalents	58,799		—		—		2,994			—			61,793
Restricted cash	—		—		160		6,864			—			7,024
Prepaid expenses, deferred financing costs and other assets	586		27,803		62,325		7,973			—			98,687
Intercompany	444,499		757,676		—		—			(1,202,175		)	—
Investment in subsidiaries	447,916		642,611		25,057		—			(1,115,584		)	—
Total assets	$	951,860	$	1,428,090	$	1,845,099	$	157,602		$	(2,317,759	)	$	2,064,892
Liabilities
Mortgage notes	$	—	$	—	$	—	$	124,022		$	—		$	124,022
Revolving credit facility	—		68,000		—		—			—			68,000
Term loan	—		200,000		—		—			—			200,000
Senior unsecured notes	—		699,272		—		—			—			699,272
Accounts payable and accrued liabilities	9,994		12,902		7,422		1,457			—			31,775
Intercompany	—		—		1,198,779		3,396			(1,202,175		)	—
Total liabilities	9,994		980,174		1,206,201		128,875			(1,202,175		)	1,123,069

Total Sabra Health Care REIT, Inc. stockholders' equity	941,866		447,916		638,898		28,770			(1,115,584		)	941,866
Noncontrolling interests	—		—		—		(43		)	—			(43		)
Total equity	941,866		447,916		638,898		28,727			(1,115,584		)	941,823
Total liabilities and equity	$	951,860	$	1,428,090	$	1,845,099	$	157,602		$	(2,317,759	)	$	2,064,892

CONSOLIDATING BALANCE SHEET

December 31, 2013

(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	$	101	$	—	$	751,771	$	163,546	$	—		$	915,418
Loans receivable and other investments, net	—		—		185,293		—		—			185,293
Cash and cash equivalents	3,551		—		—		757		—			4,308
Restricted cash	—		—		121		5,231		—			5,352
Prepaid expenses, deferred financing costs and other assets	1,217		9,207		46,694		6,134		—			63,252
Intercompany	333,125		270,194		—		42,637		(645,956		)	—
Investment in subsidiaries	128,640		267,505		25,205		—		(421,350		)	—
Total assets	$	466,634	$	546,906	$	1,009,084	$	218,305	$	(1,067,306	)	$	1,173,623
Liabilities
Mortgage notes	$	—	$	—	$	—	$	141,328	$	—		$	141,328
Secured revolving credit facility	—		—		135,500		—		—			135,500
Senior unsecured notes	—		414,402		—		—		—			414,402
Accounts payable and accrued liabilities	6,470		3,864		11,008		887		—			22,229
Intercompany	—		—		645,956		—		(645,956		)	—
Total liabilities	6,470		418,266		792,464		142,215		(645,956		)	713,459
Total equity	460,164		128,640		216,620		76,090		(421,350		)	460,164
Total liabilities and equity	$	466,634	$	546,906	$	1,009,084	$	218,305	$	(1,067,306	)	$	1,173,623

CONSOLIDATING STATEMENT OF INCOME

For the Year Ended December 31, 2014

(in thousands, except share and per share amounts)



	Parent Company			Issuers			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Elimination			Consolidated
Revenues:
Rental income	$	—		$	—		$	142,249		$	19,234		$	—		$	161,483
Interest and other income	9			—			19,357			2,669			—			22,035
Total revenues	9			—			161,606			21,903			—			183,518
Expenses:
Depreciation and amortization	52			—			37,645			5,635			—			43,332
Interest	—			37,129			4,642			5,187			—			46,958
General and administrative	18,522			2			8,555			2,260			—			29,339
Total expenses	18,574			37,131			50,842			13,082			—			119,629

Other income (expense):
Loss on extinguishment of debt	—			(21,846		)	(472		)	(136		)	—			(22,454		)
Other income	—			—			1,560			—			—			1,560
Gain on sale of real estate	—			—			3,914			—			—			3,914

Total other income (expense)	—			(21,846		)	5,002			(136		)	—			(16,980		)

Income in subsidiary	65,517			124,494			5,698			—			(195,709		)	—

Net income	46,952			65,517			121,464			8,685			(195,709		)	46,909

Net loss attributable to noncontrolling interest	—			—			—			43			—			43

Net income attributable to Sabra Health Care REIT, Inc.	46,952			65,517			121,464			8,728			(195,709		)	46,952

Preferred dividends	(10,242		)	—			—			—			—			(10,242		)

Net income attributable to common stockholders	$	36,710		$	65,517		$	121,464		$	8,728		$	(195,709	)	$	36,710

Net income attributable to common stockholders, per:
Basic common share																$	0.79
Diluted common share																$	0.78
Weighted-average number of common shares outstanding, basic																46,351,544
Weighted-average number of common shares outstanding, diluted																46,889,531

CONSOLIDATING STATEMENT OF INCOME

For the Year Ended December 31, 2013

(in thousands, except share and per share amounts)



	Parent Company			Issuers			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries		Elimination			Consolidated
Revenues:
Rental income	$	—		$	—		$	99,711		$	29,277	$	—		$	128,988
Interest and other income	86			—			5,706			—		—			5,792
Total revenues	86			—			105,417			29,277		—			134,780
Expenses:
Depreciation and amortization	51			—			25,664			7,566		—			33,281
Interest	—			28,767			4,444			7,249		—			40,460
General and administrative	15,040			4			1,294			85		—			16,423
Total expenses	15,091			28,771			31,402			14,900		—			90,164

Other income (expense):
Loss on extinguishment of debt	—			(9,750		)	(351		)	—		—			(10,101		)
Other (expense) income	—			—			(800		)	—		—			(800		)

Total other income (expense)	—			(9,750		)	(1,151		)	—		—			(10,901		)

Income in subsidiary	48,720			87,241			3,889			—		(139,850		)	—

Net income	33,715			48,720			76,753			14,377		(139,850		)	33,715

Preferred dividends	(7,966		)	—			—			—		—			(7,966		)

Net income attributable to common stockholders	$	25,749		$	48,720		$	76,753		$	14,377	$	(139,850	)	$	25,749

Net income attributable to common stockholders, per:
Basic common share															$	0.69
Diluted common share															$	0.68
Weighted-average number of common shares outstanding, basic															37,514,637
Weighted-average number of common shares outstanding, diluted															38,071,926

CONSOLIDATING STATEMENT OF INCOME

For the Year Ended December 31, 2012

(in thousands, except share and per share amounts)



	Parent Company		Issuers		Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries				Elimination			Consolidated
Revenues:
Rental income	$	—	$	—	$	75,606		$	26,136			$	—		$	101,742
Interest and other income	18		—		1,410			—				—			1,428
Total revenues	18		—		77,016			26,136				—			103,170
Expenses:
Depreciation and amortization	49		—		22,061			8,153				—			30,263
Interest	—		22,392		2,724			9,219				—			34,335
General and administrative	14,631		3		1,392			78				—			16,104
Impairment	—		—		—			2,481				—			2,481
Total expenses	14,680		22,395		26,177			19,931				—			83,183

Other income (expense):
Loss on extinguishment of debt	—		—		—			(2,670		)	—	—			(2,670		)
Other income	—		—		—			2,196				—			2,196

Total other income (expense)	—		—		—			(474		)		—			(474		)

Income (loss) in subsidiary	34,175		56,570		(3,693		)	—				(87,052		)	—

Net income attributable to common stockholders	$	19,513	$	34,175	$	47,146		$	5,731			$	(87,052	)	$	19,513

Net income attributable to common stockholders, per:
Basic common share															$	0.53
Diluted commons share															$	0.52
Weighted-average number of common shares outstanding, basic															37,061,111
Weighted-average number of common shares outstanding, diluted															37,321,517

CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2014

(in thousands)



	Parent Company			Issuers			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Elimination			Consolidated
Net cash provided by operating activities	$	53,292		$	—		$	—		$	32,045		$	—		$	85,337
Cash flows from investing activities:
Acquisitions of real estate	—			—			(763,378		)	(8,101		)	—			(771,479		)
Origination and fundings of loans receivable	—			—			(66,397		)	—			—			(66,397		)
Preferred equity investments	—			—			(15,486		)	—			—			(15,486		)
Additions to real estate	(11		)	—			(1,437		)	(23		)	—			(1,471		)
Repayment of loans receivable	—			—			1,097			—			—			1,097
Net proceeds from sale of real estate	—			—			27,264			—			—			27,264
Investment in subsidiary	(12,147		)	(12,147		)	—			—			24,294			—
Distribution from Subsidiary	1,246			1,246			—			—			(2,492		)	—
Intercompany financing	(415,790		)	(958,970		)	—			—			1,374,760			—
Net cash used in investing activities	(426,702		)	(969,871		)	(818,337		)	(8,124		)	1,396,562			(826,472		)
Cash flows from financing activities:
Proceeds from issuance of senior unsecured notes	—			499,250			—			—			—			499,250
Principal payments on senior unsecured notes	—			(211,250		)	—			—			—			(211,250		)
Net proceeds (repayments) from revolving credit facility	—			268,000			(135,500		)	—			—			132,500
Proceeds from mortgage notes	—			—			—			57,703			—			57,703
Principal payments on mortgage notes	—			—			—			(89,110		)	—			(89,110		)
Payments of deferred financing costs	—			(12,820		)	(5,133		)	(1,178		)	—			(19,131		)
Issuance of common stock	510,147			—			—			—			—			510,147
Dividends paid on common and preferred stock	(81,489		)	—			—			—			—			(81,489		)
Contribution from Parent	—			12,147			—			12,147			(24,294		)	—
Distribution to Parent	—			(1,246		)	—			(1,246		)	2,492			—
Intercompany financing	—			415,790			958,970			—			(1,374,760		)	—
Net cash provided by (used in) financing activities	428,658			969,871			818,337			(21,684		)	(1,396,562		)	798,620
Net increase in cash and cash equivalents	55,248			—			—			2,237			—			57,485
Cash and cash equivalents, beginning of period	3,551			—			—			757			—			4,308
Cash and cash equivalents, end of period	$	58,799		$	—		$	—		$	2,994		$	—		$	61,793

CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2013

(in thousands)



	Parent Company			Issuers			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Elimination			Consolidated
Net cash provided by operating activities	$	47,810		$	—		$	—		$	14,289		$	—		$	62,099
Cash flows from investing activities:
Acquisitions of real estate	—			—			(125,955		)	—			—			(125,955		)
Origination and fundings of loans receivable	—			—			(165,960		)	—			—			(165,960		)
Preferred equity investments	—			—			(7,038		)	—			—			(7,038		)
Additions to real estate	—			—			(764		)	—			—			(764		)
Net proceeds from the sale of real estate	—			—			—			2,208			—			2,208
Distribution from Subsidiary	4,066			4,066			—			—			(8,132		)	—
Intercompany financing	(178,015		)	(258,819		)	—			—			436,834			—
Net cash (used in) provided by investing activities	(173,949		)	(254,753		)	(299,717		)	2,208			428,702			(297,509		)
Cash flows from financing activities:
Proceeds from issuance of senior unsecured notes	—			200,000			—			—			—			200,000
Principal payments on senior unsecured notes	—			(113,750		)	—			—			—			(113,750		)
Net proceeds (repayments) from secured revolving credit facility	—			—			43,000			—			—			43,000
Principal payments on mortgage notes	—			—			—			(10,994		)	—			(10,994		)
Payments of deferred financing costs	—			(5,446		)	(3,010		)	(498		)	—			(8,954		)
Payment of contingent consideration	—			—			(1,300		)	—			—			(1,300		)
Issuance of preferred stock	138,249			—			—			—			—			138,249
Issuance of common stock	34,517			—			—			—			—			34,517
Dividends paid on common and preferred stock	(58,151		)	—			—			—			—			(58,151		)
Distribution to Parent	—			(4,066		)	—			(4,066		)	8,132			—
Intercompany financing	—			178,015			261,027			(2,208		)	(436,834		)	—
Net cash provided by (used in) financing activities	114,615			254,753			299,717			(17,766		)	(428,702		)	222,617
Net decrease in cash and cash equivalents	(11,524		)	—			—			(1,269		)	—			(12,793		)
Cash and cash equivalents, beginning of period	15,075			—			—			2,026			—			17,101
Cash and cash equivalents, end of period	$	3,551		$	—		$	—		$	757		$	—		$	4,308

CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2012

(in thousands)



	Parent Company			Issuers			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Elimination			Consolidated
Net cash provided by operating activities	$	53,584		$	—		$	—		$	2,668		$	—		$	56,252
Cash flows from investing activities:
Acquisitions of real estate	—			—			(205,424		)	—			—			(205,424		)
Origination and fundings of loans receivable	—			—			(22,180		)	—			—			(22,180		)
Additions to real estate	(14		)	—			(1,032		)	—			—			(1,046		)
Repayment of loans receivable	—			—			10,000			—			—			10,000
Investment in Subsidiary	(7,191		)	(7,191		)	—			—			14,382			—
Distribution from Subsidiary	1,751			1,751			—			—			(3,502		)	—
Intercompany financing	(25,915		)	(128,721		)	—			—			154,636			—
Net cash used in investing activities	(31,369		)	(134,161		)	(218,636		)	—			165,516			(218,650		)
Cash flows from financing activities:
Proceeds from the issuance of senior unsecured notes	—			106,000			—			—			—			106,000
Net proceeds (repayments) from secured revolving credit facility	—			—			92,500			—			—			92,500
Proceeds from mortgage notes	—			—			—			56,651			—			56,651
Principal payments on mortgage notes	—			—			—			(62,226		)	—			(62,226		)
Payments of deferred financing costs	—			(3,194		)	(2,585		)	(1,021		)	—			(6,800		)
Issuance of common stock	53			—			—			—			—			53
Dividends paid	(48,929		)	—			—			—			—			(48,929		)
Contribution from Parent	—			7,191			—			7,191			(14,382		)	—
Distribution to Parent	—			(1,751		)	—			(1,751		)	3,502			—
Intercompany financing	—			25,915			128,721			—			(154,636		)	—
Net cash (used in) provided by financing activities	(48,876		)	134,161			218,636			(1,156		)	(165,516		)	137,249
Net (decrease) increase in cash and cash equivalents	(26,661		)	—			—			1,512			—			(25,149		)
Cash and cash equivalents, beginning of period	41,736			—			—			514			—			42,250
Cash and cash equivalents, end of period	$	15,075		$	—		$	—		$	2,026		$	—		$	17,101