SUMMARIZED CONDENSED 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 three months ended March 31, 2014. As of March 31, 2015, 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:

CONDENSED CONSOLIDATING BALANCE SHEET

March 31, 2015

(in thousands)

(unaudited)



	Parent Company		Issuers		Combined Guarantor Subsidiaries		Combined Non- Guarantor Subsidiaries			Elimination			Consolidated
Assets
Real estate investments, net of accumulated depreciation	$	50	$	—	$	1,494,137	$	138,520		$	—		$	1,632,707
Loans receivable and other investments, net	—		—		258,346		—			—			258,346
Cash and cash equivalents	1,805		—		—		2,366			—			4,171
Restricted cash	—		—		160		6,788			—			6,948
Prepaid expenses, deferred financing costs and other assets, net	1,153		25,041		67,430		8,701			—			102,325
Intercompany	379,217		787,986		—		—			(1,167,203		)	—
Investment in subsidiaries	558,045		679,121		25,512		—			(1,262,678		)	—
Total assets	$	940,270	$	1,492,148	$	1,845,585	$	156,375		$	(2,429,881	)	$	2,004,497

Liabilities
Mortgage notes	$	—	$	—	$	—	$	123,325		$	—		$	123,325
Revolving credit facility	—		26,000		—		—			—			26,000
Term loan	—		200,000		—		—			—			200,000
Senior unsecured notes	—		699,298		—		—			—			699,298
Accounts payable and accrued liabilities	8,062		8,805		5,977		876			—			23,720
Intercompany	—		—		1,165,099		2,104			(1,167,203		)	—
Total liabilities	8,062		934,103		1,171,076		126,305			(1,167,203		)	1,072,343

Total Sabra Health Care REIT, Inc. stockholders' equity	932,208		558,045		674,509		30,124			(1,262,678		)	932,208
Noncontrolling interests	—		—		—		(54		)	—			(54		)
Total equity	932,208		558,045		674,509		30,070			(1,262,678		)	932,154
Total liabilities and equity	$	940,270	$	1,492,148	$	1,845,585	$	156,375		$	(2,429,881	)	$	2,004,497

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2014

(in thousands)



	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, net	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

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the Three Months Ended March 31, 2015

(dollars in thousands, except per share amounts)

(unaudited)



	Parent Company			Issuers		Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries		Elimination			Consolidated
Revenues:
Rental income	$	—		$	—	$	44,601		$	4,904	$	—		$	49,505
Interest and other income	1			—		5,384			682		—			6,067
Total revenues	1			—		49,985			5,586		—			55,572
Expenses:
Depreciation and amortization	13			—		12,702			1,435		—			14,150
Interest	—			12,550		—			1,330		—			13,880
General and administrative	5,438			—		2,023			542		—			8,003
Total expenses	5,451			12,550		14,725			3,307		—			36,033

Other income (expense):
Other (expense) income	—			—		(100		)	—		—			(100		)

Total other expense	—			—		(100		)	—		—			(100		)

Income in subsidiaries	24,900			37,450		1,395			—		(63,745		)	—

Net income	19,450			24,900		36,555			2,279		(63,745		)	19,439

Net loss attributable to noncontrolling interests	—			—		—			11		—			11

Net income attributable to Sabra Health Care REIT, Inc.	19,450			24,900		36,555			2,290		(63,745		)	19,450

Preferred stock dividends	(2,561		)	—		—			—		—			(2,561		)

Net income attributable to common stockholders	$	16,889		$	24,900	$	36,555		$	2,290	$	(63,745	)	$	16,889

Net income attributable to common stockholders, per:
Basic common share														$	0.29
Diluted common share														$	0.28
Weighted-average number of common shares outstanding, basic														59,185,225
Weighted-average number of common shares outstanding, diluted														59,559,253

CONDENSED CONSOLIDATING STATEMENT OF (LOSS) INCOME

For the Three Months Ended March 31, 2014

(dollars in thousands, except per share amounts)

(unaudited)



	Parent Company			Issuers			Combined Guarantor Subsidiaries		Combined Non- Guarantor Subsidiaries			Elimination			Consolidated
Revenues:
Rental income	$	—		$	—		$	28,777	$	7,316		$	—		$	36,093
Interest and other income	4			—			4,092		661			—			4,757
Total revenues	4			—			32,869		7,977			—			40,850
Expenses:
Depreciation and amortization	13			—			7,420		1,917			—			9,350
Interest	—			7,790			1,874		1,470			—			11,134
General and administrative	4,692			1			444		716			—			5,853
Total expenses	4,705			7,791			9,738		4,103			—			26,337

Other (expense) income:
Loss on extinguishment of debt	—			(21,619		)	—		(515		)	—			(22,134		)
Other income	—			—			300		—			—			300

Total other (expense) income	—			(21,619		)	300		(515		)	—			(21,834		)

(Loss) income in subsidiaries	(2,602		)	26,808			1,341		—			(25,547		)	—

Net (loss) income	(7,303		)	(2,602		)	24,772		3,359			(25,547		)	(7,321		)

Net loss attributable to noncontrolling interests	—			—			—		18			—			18

Net (loss) income attributable to Sabra Health Care REIT, Inc.	(7,303		)	(2,602		)	24,772		3,377			(25,547		)	(7,303		)

Preferred dividends	(2,561		)	—			—		—			—			(2,561		)

Net (loss) income attributable to common stockholders	$	(9,864	)	$	(2,602	)	$	24,772	$	3,377		$	(25,547	)	$	(9,864	)

Net loss attributable to common stockholders, per:
Basic common share															$	(0.25	)
Diluted common share															$	(0.25	)
Weighted-average number of common shares outstanding, basic															38,968,403
Weighted-average number of common shares outstanding, diluted															38,968,403

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

For the Three Months Ended March 31, 2015

(dollars in thousands, except per share amounts)

(unaudited)



	Parent Company		Issuers			Combined Guarantor Subsidiaries		Combined Non- Guarantor Subsidiaries		Elimination			Consolidated

Net income	$	19,450	$	24,900		$	36,555	$	2,279	$	(63,745	)	$	19,439
Other comprehensive loss:
Unrealized loss on cash flow hedge	—		(1,545		)	—		—		—			(1,545		)

Comprehensive income	19,450		23,355			36,555		2,279		(63,745		)	17,894

Comprehensive loss attributable to noncontrolling interest	—		—			—		11		—			11

Comprehensive income attributable to Sabra Health Care REIT, Inc.	$	19,450	$	23,355		$	36,555	$	2,290	$	(63,745	)	$	17,905

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Three Months Ended March 31, 2015

(in thousands)

(unaudited)



	Parent Company			Issuers			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Elimination			Consolidated
Net cash provided by operating activities	$	23,502		$	—		$	—		$	1,199		$	—		$	24,701
Cash flows from investing activities:
Origination and fundings of loans receivable	—			—			(7,303		)	—			—			(7,303		)
Preferred equity investments	—			—			(311		)	—			—			(311		)
Additions to real estate	(3		)	—			(501		)	(171		)	—			(675		)
Repayment of loans receivable	—			—			2,052			—			—			2,052
Investment in subsidiaries	(414		)	(414		)	—			—			828			—
Distribution from subsidiaries	1,355			1,355			—			—			(2,710		)	—
Intercompany financing	(48,175		)	(6,063		)	—			—			54,238			—
Net cash used in investing activities	(47,237		)	(5,122		)	(6,063		)	(171		)	52,356			(6,237		)
Cash flows from financing activities:
Net repayments from revolving credit facility	—			(42,000		)	—			—			—			(42,000		)
Principal payments on mortgage notes	—			—			—			(697		)	—			(697		)
Payments of deferred financing costs	—			(112		)	—			(18		)	—			(130		)
Issuance of common stock	(7,587		)	—			—			—			—			(7,587		)
Dividends paid on common and preferred stock	(25,672		)	—			—			—			—			(25,672		)
Contribution from parent	—			414			—			414			(828		)	—
Distribution to parent	—			(1,355		)	—			(1,355		)	2,710			—
Intercompany financing	—			48,175			6,063			—			(54,238		)	—
Net cash (used in) provided by financing activities	(33,259		)	5,122			6,063			(1,656		)	(52,356		)	(76,086		)
Net decrease in cash and cash equivalents	(56,994		)	—			—			(628		)	—			(57,622		)
Cash and cash equivalents, beginning of period	58,799			—			—			2,994			—			61,793
Cash and cash equivalents, end of period	$	1,805		$	—		$	—		$	2,366		$	—		$	4,171

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Three Months Ended March 31, 2014

(in thousands)

(unaudited)



	Parent Company			Issuers			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Elimination			Consolidated
Net cash (used in) provided by operating activities	$	(10,795	)	$	—		$	—		$	12,002		$	—		$	1,207
Cash flows from investing activities:
Acquisitions of real estate	—			—			(108,650		)	—			—			(108,650		)
Origination of note receivable	—			—			(19,428		)	—			—			(19,428		)
Preferred equity investment	—			—			(5		)	—			—			(5		)
Additions to real estate	—			—			(56		)	—			—			(56		)
Investment in subsidiaries	(1,165		)	(1,165		)	—			—			2,330			—
Intercompany financing	27,955			(101,641		)	—			—			73,686			—
Net cash provided by (used in) investing activities	26,790			(102,806		)	(128,139		)	—			76,016			(128,139		)
Cash flows from financing activities:
Proceeds from issuance of senior unsecured notes	—			350,000			—			—			—			350,000
Principal payments on senior unsecured notes	—			(211,250		)	—			—			—			(211,250		)
Net proceeds from revolving credit facility	—			—			26,500			—			—			26,500
Proceeds from mortgage notes	—			—			—			46,103			—			46,103
Principal payments on mortgage notes	—			—			—			(57,325		)	—			(57,325		)
Payments of deferred financing costs	—			(9,154		)	(2		)	(717		)	—			(9,873		)
Issuance of common stock	(648		)	—			—			—			—			(648		)
Dividends paid	(16,597		)	—			—			—			—			(16,597		)
Contribution from parent	—			1,165			—			1,165			(2,330		)	—
Intercompany financing	—			(27,955		)	101,641			—			(73,686		)	—
Net cash (used in) provided by financing activities	(17,245		)	102,806			128,139			(10,774		)	(76,016		)	126,910
Net (decrease) increase in cash and cash equivalents	(1,250		)	—			—			1,228			—			(22		)
Cash and cash equivalents, beginning of period	3,551			—			—			757			—			4,308
Cash and cash equivalents, end of period	$	2,301		$	—		$	—		$	1,985		$	—		$	4,286