EX-99.3 4 sbraex9932022q1.htm Q1 2022 NON-GAAP RECONCILIATIONS Document

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Reconciliations of Non-GAAP Financial Measures

March 31, 2022

(Unaudited)



SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
FFO, Normalized FFO, AFFO and Normalized AFFO
(dollars in thousands, except per share data)

Three Months Ended March 31,
 20222021
Net income$40,602 $33,447 
Add:
Depreciation and amortization of real estate assets45,256 44,375 
Depreciation, amortization and impairment of real estate assets related to unconsolidated joint venture4,633 5,844 
Net gain on sales of real estate— (1,313)
Net loss on sales of real estate related to unconsolidated joint venture— 33 
FFO$90,491 $82,386 
Write-offs of straight-line rental income receivable and lease intangibles(182)— 
Lease termination income(2,338)— 
Loss on extinguishment of debt271 793 
Provision for loan losses and other reserves475 2,025 
Other normalizing items (1)
(48)344 
Normalized FFO$88,669 $85,548 
FFO$90,491 $82,386 
Stock-based compensation expense2,456 2,288 
Non-cash rental and related revenues(4,474)(5,713)
Non-cash interest income(547)(412)
Non-cash interest expense2,698 1,896 
Non-cash portion of loss on extinguishment of debt271 793 
Provision for loan losses and other reserves475 2,025 
Other non-cash adjustments related to unconsolidated joint venture(986)(596)
Other non-cash adjustments183 172 
AFFO$90,567 $82,839 
Cash portion of lease termination income(2,338)— 
Other normalizing items (1)
(186)321 
Normalized AFFO$88,043 $83,160 
Amounts per diluted common share:
Net income$0.18 $0.16 
FFO$0.39 $0.39 
Normalized FFO$0.38 $0.40 
AFFO$0.39 $0.39 
Normalized AFFO$0.38 $0.39 
Weighted average number of common shares outstanding, diluted:
Net income, FFO and Normalized FFO 231,564,970 212,624,305 
AFFO and Normalized AFFO 232,484,734 213,270,122 

(1)     FFO and AFFO for each of the three months ended March 31, 2022 and 2021 include $0.2 million earned during the period related to legacy Care Capital Properties, Inc. investments. In addition, other normalizing items for FFO and AFFO include triple-net operating expenses, net of recoveries.
logo2.jpg See reporting definitions.                        2



SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
EBITDA, Adjusted EBITDA and Annualized Adjusted EBITDA
Net Debt and Net Debt to Adjusted EBITDA
(in thousands) 

Trailing Twelve Months EndedYear Ended
March 31, 2022December 31, 2021
Net loss$(106,101)$(113,256)
Interest99,161 98,632 
Income tax expense1,429 1,845 
Depreciation and amortization179,872 178,991 
EBITDA$174,361 $166,212 
Loss from unconsolidated joint venture25,747 27,955 
Other-than-temporary impairment of unconsolidated joint venture164,126 164,126 
Stock-based compensation expense 8,082 7,914 
Merger and acquisition costs222 279 
Provision for loan losses and other reserves and non-cash revenue write-offs46,343 47,893 
Impairment of real estate9,499 9,499 
Loss on extinguishment of debt34,100 34,622 
Other expense1,452 1,813 
Lease termination income(2,338)— 
Net gain on sales of real estate(10,988)(12,301)
Adjusted EBITDA (1)
$450,606 $448,012 
Annualizing adjustments (2)
10,158 14,695 
Annualized Adjusted EBITDA (3)
$460,764 $462,707 
March 31, 2022December 31, 2021
Secured debt$51,572 $67,602 
Revolving credit facility16,792 — 
Term loans559,950 598,438 
Senior unsecured notes1,750,000 1,750,000 
Consolidated Debt2,378,314 2,416,040 
Cash and cash equivalents(24,836)(111,996)
Net Debt$2,353,478 $2,304,044 
March 31, 2022December 31, 2021
Net Debt$2,353,478 $2,304,044 
Annualized Adjusted EBITDA$460,764 $462,707 
Net Debt to Adjusted EBITDA5.11x4.98x




(1)    Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation and amortization (“EBITDA”) excluding the impact of merger-related costs, stock-based compensation expense under the Company’s long-term equity award program and loan loss reserves.
(2)    Annualizing adjustments give effect to the acquisitions and dispositions completed during the twelve months ended for the respective period as though such acquisitions and dispositions were completed as of the beginning of the period.
(3)    Annualized Adjusted EBITDA is calculated as Adjusted EBITDA as adjusted to give effect to the adjustments described in footnote 2 above.
logo2.jpg See reporting definitions.                        3



SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Consolidated Statements of Income
Supplemental Information
(in thousands)

Three Months Ended March 31,
 20222021
Cash rental income$100,357 $102,915 
Straight-line rental income2,694 4,077 
Straight-line rental income receivable write-offs(139)— 
Above/below market lease amortization1,593 1,636 
Above/below market lease intangible write-offs326 — 
Operating expense recoveries5,055 4,755 
Rental and related revenues$109,886 $113,383 


logo2.jpg See reporting definitions.                        4



SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Senior Housing - Managed Revenues
(in thousands)

Three Months Ended
 March 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
Revenues: (1)
Resident fees and services$42,227 $40,503 $39,782 $38,919 $36,039 
Resident fees and services not included in same store(3,531)(2,683)(2,812)(2,315)(395)
Same store resident fees and services$38,696 $37,820 $36,970 $36,604 $35,644 








































(1)    Revenues have been adjusted for changes in the foreign currency exchange rate where applicable.
logo2.jpg See reporting definitions.                        5



SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Cash NOI by Facility Type
(in thousands)
Three Months Ended March 31, 2022
Skilled Nursing/ Transitional CareSenior HousingBehavioral HealthSpecialty Hospitals and Other
Senior Housing - LeasedSenior Housing - ManagedTotal Senior HousingOtherUnconsolidated Joint VentureCorporateTotal
Net income (loss)$51,927 $6,797 $(93)$6,704 $6,314 $3,224 $10,992 $(2,802)$(35,757)$40,602 
Adjustments:
Depreciation and amortization26,303 5,340 9,216 14,556 2,917 1,460 — — 20 45,256 
Interest217 376 — 376 — — — — 24,379 24,972 
General and administrative— — — — — — — — 10,396 10,396 
Provision for loan losses and other reserves— — — — — — — — 475 475 
Loss on extinguishment of debt— — — — — — — — 271 271 
Other income— — — — — — — — (68)(68)
Loss from unconsolidated JV— — — — — — — 2,802 — 2,802 
Income tax expense— — — — — — — — 284 284 
Sabra’s share of unconsolidated JV Net Operating Income— — — — — — — 3,543 — 3,543 
Net Operating Income$78,447 $12,513 $9,123 $21,636 $9,231 $4,684 $10,992 $3,543 $— $128,533 
Non-cash revenue and expense adjustments(2,947)(935)— (935)(342)(228)(547)— — (4,999)
Cash Net Operating Income$75,500 $11,578 $9,123 $20,701 $8,889 $4,456 $10,445 $3,543 $— $123,534 
Cash Net Operating Income not included in same store— (74)(940)(1,014)— (18)— — — (1,032)
Same store Cash Net Operating Income$75,500 $11,504 $8,183 $19,687 $8,889 $4,438 
Annualizing adjustments (1)
201,150 37,581 28,676 66,257 27,569 13,355 22,276 (3,543)— 327,064 
Annualized Cash Net Operating Income$276,650 $49,085 $36,859 $85,944 $36,458 $17,793 $32,721 — $— $449,566 
Reallocation adjustments (2)
873 5,630 — 5,630 23,978 — (30,481)— — — 
Annualized Cash Net Operating Income, as adjusted$277,523 $54,715 $36,859 $91,574 $60,436 $17,793 $2,240 $— $— $449,566 





(1)    Represents the annual effect of acquisitions, dispositions, lease modifications and scheduled rent increases completed during the period and mathematical adjustments needed to make Cash Net Operating Income for the period representative of Cash Net Operating Income for a full year. Annualizing adjustments also include the removal of triple-net operating expenses (net of recoveries), the Enlivant Joint Venture Cash NOI and the residual rents due to Sabra from prior asset sales under the Company’s 2017 memorandum of understanding with Genesis, as well as an adjustment to reflect the reduction in Avamere's annual base rent to $30.7 million effective February 1, 2022.
(2)    Adjustments to reflect Annualized Cash Net Operating Income from sales-type lease, mortgage and construction loans receivable and preferred equity investments in the related asset class of the underlying real estate.
logo2.jpg             See reporting definitions.                                  6

SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Cash NOI by Facility Type
(in thousands)
Three Months Ended December 31, 2021
Skilled Nursing/ Transitional CareSenior HousingBehavioral HealthSpecialty Hospitals and Other
Senior Housing - LeasedSenior Housing - ManagedTotal Senior HousingOtherUnconsolidated Joint VentureCorporateTotal
Net income (loss)$26,649 $9,213 $(626)$8,587 $7,354 $7,135 $7,940 $(13,264)$(68,754)$(24,353)
Adjustments:
Depreciation and amortization26,302 5,353 8,787 14,140 3,124 1,494 — — 19 45,079 
Interest229 400 — 400 — — — 25,047 25,676 
General and administrative— — — — — — — 8,237 8,237 
Provision for loan losses and other reserves— — — — — — — 2,045 2,045 
Impairment of real estate9,004 — — — — — — — 9,004 
Loss on extinguishment of debt— — — — — — — 32,862 32,862 
Other expense— — — — — — — 13 13 
Net gain on sales of real estate(7,153)(2,287)— (2,287)(816)(3,829)— — — (14,085)
Loss from unconsolidated JV— — — — — — 13,264 — 13,264 
Income tax expense— — — — — — — 531 531 
Sabra’s share of unconsolidated JV Net Operating Loss— — — — — — (4,240)— (4,240)
Net Operating Income$55,031 $12,679 $8,161 $20,840 $9,662 $4,800 $7,940 $(4,240)$— $94,033 
Non-cash revenue and expense adjustments16,695 (582)— (582)(140)(240)(544)— — 15,189 
Foreign exchange rate adjustment— — (11)(11)— — — — — (11)
Cash Net Operating Income$71,726 $12,097 $8,150 $20,247 $9,522 $4,560 $7,396 $(4,240)$— $109,211 
Cash Net Operating Income not included in same store(81)(98)(787)(885)(918)(187)
Same store Cash Net Operating Income$71,645 $11,999 $7,363 $19,362 $8,604 $4,373 









logo2.jpg             See reporting definitions.                                  7

SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Cash NOI by Facility Type
(in thousands)
Three Months Ended September 30, 2021
Skilled Nursing/ Transitional CareSenior HousingBehavioral HealthSpecialty Hospitals and Other
Senior Housing - LeasedSenior Housing - ManagedTotal Senior HousingOtherUnconsolidated Joint VentureCorporateTotal
Net income (loss)$26,977 $6,512 $300 $6,812 $6,636 $3,356 $3,405 $(4,018)$(32,945)$10,223 
Adjustments:
Depreciation and amortization26,634 5,234 8,557 13,791 3,093 1,510 — — 18 45,046 
Interest297 404 — 404 — — — — 23,542 24,243 
General and administrative— — — — — — — — 8,683 8,683 
Recovery of loan losses and other reserves— — — — — — — — (26)(26)
Impairment of real estate312 183 — 183 — — — — — 495 
Loss on extinguishment of debt— — — — — — — — 913 913 
Other income— — — — — — — — (277)(277)
Net (gain) loss on sales of real estate— (856)201 (655)— — — — — (655)
Loss from unconsolidated JV— — — — — — — 4,018 — 4,018 
Income tax expense— — — — — — — — 92 92 
Sabra’s share of unconsolidated JV Net Operating Income— — — — — — — 3,521 — 3,521 
Net Operating Income$54,220 $11,477 $9,058 $20,535 $9,729 $4,866 $3,405 $3,521 $— $96,276 
Non-cash revenue and expense adjustments20,420 935 — 935 (313)(277)(530)— — 20,235 
Foreign exchange rate adjustment— — (11)(11)— — — — — (11)
Cash Net Operating Income$74,640 $12,412 $9,047 $21,459 $9,416 $4,589 $2,875 $3,521 $— $116,500 
Cash Net Operating Income not included in same store(809)
Same store Cash Net Operating Income$8,238 










logo2.jpg             See reporting definitions.                                  8

SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Cash NOI by Facility Type
(in thousands)
Three Months Ended June 30, 2021
Skilled Nursing/ Transitional CareSenior HousingBehavioral HealthSpecialty Hospitals and Other
Senior Housing - Leased
Senior Housing - Managed (1)
Total Senior HousingOtherUnconsolidated Joint VentureCorporateTotal
Net income (loss)$47,612 $7,639 $1,810 $9,449 $6,670 $3,332 $3,031 $(169,789)$(32,878)$(132,573)
Adjustments:
Depreciation and amortization26,363 5,322 8,407 13,729 2,835 1,547 — — 17 44,491 
Interest299 412 — 412 — — — — 23,559 24,270 
General and administrative— — — — — — — — 8,811 8,811 
Recovery of loan losses and other reserves— — — — — — — — (109)(109)
Loss on extinguishment of debt— — — — — — — — 54 54 
Other expense— — — — — — — — 24 24 
Net loss on sales of real estate3,752 — — — — — — — — 3,752 
Loss from unconsolidated JV— — — — — — — 169,789 — 169,789 
Income tax expense— — — — — — — — 522 522 
Sabra’s share of unconsolidated JV Net Operating Income— — — — — — — 2,318 — 2,318 
Net Operating Income$78,026 $13,373 $10,217 $23,590 $9,505 $4,879 $3,031 $2,318 $— $121,349 
Non-cash revenue and expense adjustments(3,639)(812)— (812)(146)(292)(502)— — (5,391)
Foreign exchange rate adjustment— — (54)(54)— — — — — (54)
Cash Net Operating Income$74,387 $12,561 $10,163 $22,724 $9,359 $4,587 $2,529 $2,318 $— $115,904 
Cash Net Operating Income not included in same store(855)
Same store Cash Net Operating Income$9,308 










(1)    Net Operating Income, Cash Net Operating Income and Same store Cash Net Operating Income include $0.5 million of Grant Income.
logo2.jpg             See reporting definitions.                                  9

SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Cash NOI by Facility Type
(in thousands)
Three Months Ended March 31, 2021
Skilled Nursing/ Transitional CareSenior HousingBehavioral HealthSpecialty Hospitals and Other
Senior Housing - LeasedSenior Housing - ManagedTotal Senior HousingOtherUnconsolidated Joint VentureCorporateTotal
Net income (loss)$54,883 $7,683 $(584)$7,099 $6,296 $3,310 $2,941 $(5,010)$(36,072)$33,447 
Adjustments:
Depreciation and amortization26,618 5,318 7,680 12,998 3,122 1,619 — — 18 44,375 
Interest302 410 — 410 — — — — 23,731 24,443 
General and administrative— — — — — — — — 8,938 8,938 
Provision for loan losses and other reserves— — — — — — — — 2,025 2,025 
Loss on extinguishment of debt— — — — — — — — 793 793 
Other income— — — — — — — — (133)(133)
Net gain on sales of real estate(1,313)— — — — — — — — (1,313)
Loss from unconsolidated JV— — — — — — — 5,010 — 5,010 
Income tax expense— — — — — — — — 700 700 
Sabra’s share of unconsolidated JV Net Operating Income— — — — — — — 3,055 — 3,055 
Net Operating Income$80,490 $13,411 $7,096 $20,507 $9,418 $4,929 $2,941 $3,055 $— $121,340 
Non-cash revenue and expense adjustments(4,295)(870)— (870)(218)(303)(412)— — (6,098)
Cash Net Operating Income$76,195 $12,541 $7,096 $19,637 $9,200 $4,626 $2,529 $3,055 $— $115,242 
Cash Net Operating Income not included in same store(158)
Same store Cash Net Operating Income$6,938 













logo2.jpg             See reporting definitions.                                  10

SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Payor Type
(in thousands)
Three Months Ended March 31, 2022
Private PayorsNon-Private PayorsOtherUnconsolidated Joint VentureCorporateTotal
Net income (loss)$21,432 $46,737 $10,992 $(2,802)$(35,757)$40,602 
Adjustments:
Depreciation and amortization21,750 23,486 — — 20 45,256 
Interest401 192 — — 24,379 24,972 
General and administrative— — — — 10,396 10,396 
Provision for loan losses and other reserves— — — — 475 475 
Loss on extinguishment of debt— — — — 271 271 
Other income— — — — (68)(68)
Loss from unconsolidated JV— — — 2,802 — 2,802 
Income tax expense— — — — 284 284 
Sabra’s share of unconsolidated JV Net Operating Income— — — 3,543 — 3,543 
Net Operating Income$43,583 $70,415 $10,992 $3,543 $— $128,533 
Non-cash revenue and expense adjustments(1,999)(2,453)(547)— — (4,999)
Cash Net Operating Income$41,584 $67,962 $10,445 $3,543 $— $123,534 
Annualizing adjustments (1)
124,559 182,740 22,276 (3,543)— 326,032 
Annualized Cash Net Operating Income$166,143 $250,702 $32,721 $— $— $449,566 












(1)    Represents the annual effect of acquisitions, dispositions, lease modifications and scheduled rent increases completed during the period and mathematical adjustments needed to make Cash Net Operating Income for the period representative of Cash Net Operating Income for a full year. Annualizing adjustments also include the removal of triple-net operating expenses (net of recoveries), the Enlivant Joint Venture Cash NOI and the residual rents due to Sabra from prior asset sales under the Company’s 2017 memorandum of understanding with Genesis, as well as an adjustment to reflect the reduction in Avamere's annual base rent to $30.7 million effective February 1, 2022.
logo2.jpg             See reporting definitions.                                  11

SABRA HEALTH CARE REIT, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
Annualized Cash NOI by Relationship
(in thousands)
Three Months Ended March 31, 2022
North American HealthcareSignature HealthcareAvamere Family of CompaniesSignature BehavioralRecovery Centers of AmericaHoliday AL Holdings LPCadia HealthcareHealthmark GroupThe McGuire GroupCommuniCareAll Other RelationshipsCorporateTotal
Net income (loss)$7,411 $6,247 $8,841 $5,711 $5,726 $445 $2,877 $3,213 $3,454 $2,739 $29,695 $(35,757)$40,602 
Adjustments:
Depreciation and amortization2,803 3,570 2,977 2,242 303 5,106 2,675 1,194 1,782 1,134 21,450 20 45,256 
Interest— — — — — — — — — — 593 24,379 24,972 
General and administrative— — — — — — — — — — — 10,396 10,396 
Provision for loan losses and other reserves— — — — — — — — — — — 475 475 
Loss on extinguishment of debt— — — — — — — — — — — 271 271 
Other income— — — — — — — — — — — (68)(68)
Loss from unconsolidated JV— — — — — — — — — — 2,802 — 2,802 
Income tax expense— — — — — — — — — — — 284 284 
Sabra’s share of unconsolidated JV Net Operating Income— — — — — — — — — — 3,543 — 3,543 
Net Operating Income$10,214 $9,817 $11,818 $7,953 $6,029 $5,551 $5,552 $4,407 $5,236 $3,873 $58,083 $— $128,533 
Non-cash revenue and expense adjustments(435)1 12 (315)(61)— (221)1 (1,153)105 (2,933)— (4,999)
Cash Net Operating Income$9,779 $9,818 $11,830 $7,638 $5,968 $5,551 $5,331 $4,408 $4,083 $3,978 $55,150 $— $123,534 
Annualizing adjustments (1)
29,338 28,593 18,870 22,913 18,222 16,651 14,421 13,078 12,358 11,991 139,597 — 326,032 
Annualized Cash Net Operating Income$39,117 $38,411 $30,700 $30,551 $24,190 $22,202 $19,752 $17,486 $16,441 $15,969 $194,747 $— $449,566 












(1)    Represents the annual effect of acquisitions, dispositions, lease modifications and scheduled rent increases completed during the period and mathematical adjustments needed to make Cash Net Operating Income for the period representative of Cash Net Operating Income for a full year. Annualizing adjustments also include the removal of triple-net operating expenses (net of recoveries), the Enlivant Joint Venture Cash NOI and the residual rents due to Sabra from prior asset sales under the Company’s 2017 memorandum of understanding with Genesis, as well as an adjustment to reflect the reduction in Avamere's annual base rent to $30.7 million effective February 1, 2022.
logo2.jpg             See reporting definitions.                                  12
SABRA HEALTH CARE REIT, INC.
REPORTING DEFINITIONS
Adjusted EBITDA. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation and amortization (“EBITDA”) excluding the impact of merger-related costs, stock-based compensation expense under the Company's long-term equity award program, and loan loss reserves. Adjusted EBITDA is an important non-GAAP supplemental measure of operating performance.
Annualized Cash Net Operating Income (“Annualized Cash NOI”). The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company considers Annualized Cash NOI an important supplemental measure because it allows investors, analysts and its management to evaluate the operating performance of its investments. The Company defines Annualized Cash NOI as Annualized Revenues less operating expenses and non-cash revenues and expenses. Annualized Cash NOI excludes all other financial statement amounts included in net income.
Annualized Revenues. The annual contractual rental revenues under leases and interest and other income generated by the Company’s loans receivable and other investments based on amounts invested and applicable terms as of the end of the period presented. Annualized Revenues do not include tenant recoveries or additional rents and are adjusted to (i) reflect actual payments received during the twelve months ended at the end of the respective period for leases no longer accounted for on an accrual basis, (ii) exclude residual rents due to Sabra from prior asset sales under the Company’s 2017 memorandum of understanding with Genesis and (iii) reflect the reduction in Avamere’s annual base rent to $30.7 million effective February 1, 2022.
Behavioral Health. Includes behavioral hospitals that provide inpatient and outpatient care for patients with mental health conditions, chemical dependence or substance addictions and addiction treatment centers that provide treatment services for chemical dependence and substance addictions, which may include inpatient care, outpatient care, medical detoxification, therapy and counseling.
Cash Net Operating Income (“Cash NOI”). The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company considers Cash NOI an important supplemental measure because it allows investors, analysts and its management to evaluate the operating performance of its investments. The Company defines Cash NOI as total revenues less operating expenses and non-cash revenues and expenses. Cash NOI excludes all other financial statement amounts included in net income.
Consolidated Debt. The principal balances of the Company’s revolving credit facility, term loans, senior unsecured notes, and secured indebtedness as reported in the Company’s consolidated financial statements.
Funds From Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”). The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company also believes that funds from operations, or FFO, as defined in accordance with the definition used by the National Association of Real Estate Investment Trusts (“Nareit”), and adjusted funds from operations, or AFFO (and related per share amounts) are important non-GAAP supplemental measures of the Company’s operating performance. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a real estate investment trust that uses historical cost accounting for depreciation could be less informative. Thus, Nareit created FFO as a supplemental measure of operating performance for real estate investment trusts that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. FFO is defined as net income, computed in accordance with GAAP, excluding gains or losses from real estate dispositions and the Company’s share of gains or losses from real estate dispositions related to its unconsolidated joint venture, plus real estate depreciation and amortization, net of amounts related to noncontrolling interests, plus the Company’s share of depreciation and amortization related to its unconsolidated joint venture, and real estate impairment charges of both consolidated and unconsolidated entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. AFFO is defined as FFO excluding merger and acquisition costs, stock-based compensation expense, non-cash rental and related revenues, non-cash interest income, non-cash interest expense, non-cash portion of loss on extinguishment of debt, provision for loan losses and other reserves, non-cash lease termination income and deferred income taxes, as well as other non-cash revenue and expense items (including ineffectiveness gain/loss on derivative instruments, and non-cash revenue and expense amounts related to noncontrolling interests) and the Company’s share of non-cash adjustments related to its unconsolidated joint venture. The Company believes that the use of FFO and AFFO (and the related per share amounts), combined with the required GAAP presentations, improves the understanding of the Company’s operating results among investors and makes comparisons of operating results among real estate investment trusts more meaningful. The Company considers FFO and AFFO to be useful measures for reviewing comparative operating and financial performance because, by excluding the applicable items listed above, FFO and AFFO can help investors compare the operating performance of the Company between periods or as compared to other companies. While FFO and AFFO are relevant and widely used measures of operating performance of real estate investment trusts, they do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. FFO and AFFO also do not consider the costs associated with capital expenditures related to the Company’s real estate assets nor do they purport to be indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other real estate investment trusts that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define AFFO differently than the Company does.
Grant Income. Grant Income consists of funds specifically paid to communities in our Senior Housing - Managed portfolio from state or federal governments related to the pandemic and were incremental to the amounts that would have otherwise been received for providing care to residents.
Net Debt. The principal balances of the Company’s revolving credit facility, term loans, senior unsecured notes, and secured indebtedness as reported in the Company’s consolidated financial statements, net of cash and cash equivalents as reported in the Company’s consolidated financial statements.
Net Debt to Adjusted EBITDA. Net Debt to Adjusted EBITDA is calculated as Net Debt divided by Annualized Adjusted EBITDA, which is Adjusted EBITDA, as adjusted for annualizing adjustments that give effect to the acquisitions and dispositions completed during the respective period as though such acquisitions and dispositions were completed as of the beginning of the period presented.
Net Operating Income (“NOI”). The Company believes that net income as defined by GAAP is the most appropriate earnings measure. The Company considers NOI an important supplemental measure because it allows investors, analysts and its management to evaluate the operating performance of its investments. The Company defines NOI as total revenues less operating expenses. NOI excludes all other financial statement amounts included in net income.
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SABRA HEALTH CARE REIT, INC.
REPORTING DEFINITIONS
Normalized FFO and Normalized AFFO. Normalized FFO and Normalized AFFO represent FFO and AFFO, respectively, adjusted for certain income and expense items that the Company does not believe are indicative of its ongoing operating results. The Company considers Normalized FFO and Normalized AFFO to be useful measures to evaluate the Company’s operating results excluding these income and expense items to help investors compare the operating performance of the Company between periods or as compared to other companies. Normalized FFO and Normalized AFFO do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. Normalized FFO and Normalized AFFO also do not consider the costs associated with capital expenditures related to the Company’s real estate assets nor do they purport to be indicative of cash available to fund the Company’s future cash requirements. Further, the Company’s computation of Normalized FFO and Normalized AFFO may not be comparable to Normalized FFO and Normalized AFFO reported by other real estate investment trusts that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define FFO and AFFO or Normalized FFO and Normalized AFFO differently than the Company does.
Senior Housing. Senior Housing communities include independent living, assisted living, continuing care retirement and memory care communities.
Senior Housing - Managed. Senior Housing communities operated by third-party property managers pursuant to property management agreements.
Skilled Nursing/Transitional Care. Skilled Nursing/Transitional Care facilities include skilled nursing, transitional care, multi-license designation and mental health facilities.
Specialty Hospitals and Other. Includes acute care, long-term acute care and rehabilitation hospitals, facilities that provide residential services, which may include assistance with activities of daily living, and other facilities not classified as Skilled Nursing/Transitional Care, Senior Housing or Behavioral Health.
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