Sabra Health Care REIT, Inc.: Form 10-Q for the period ended Sep 30, 2025

The discussion below contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those which are discussed in the “Risk Factors” section in Part I, Item 1A of our 2024 Annual Report on Form 10-K. Also see “Statement Regarding Forward-Looking Statements” preceding Part I.

The following discussion and analysis should be read in conjunction with our accompanying unaudited consolidated financial statements and the notes thereto.

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is organized as follows:

• Overview
• Critical Accounting Policies and Estimates
• Recently Issued Accounting Standards Updates
• Results of Operations
• Liquidity and Capital Resources
• Concentration of Credit Risk
• Skilled Nursing Facility Reimbursement Rates

Overview

We operate as a self-administered, self-managed REIT that, through our subsidiaries, owns and invests in real estate serving the healthcare industry.

Our primary business consists of acquiring, financing and owning real estate property to be leased to third-party tenants in the healthcare sector. We primarily generate revenues by leasing properties to tenants and owning properties operated by third-party property managers throughout the United States (“U.S.”) and Canada.

Our investment portfolio is primarily comprised of skilled nursing/transitional care facilities, senior housing communities (“Senior Housing - Leased”), behavioral health facilities, and specialty hospitals and other facilities, in each case leased to third-party operators; senior housing communities operated by third-party property managers pursuant to property management agreements (“Senior Housing - Managed”); investments in joint ventures; loans receivable; and preferred equity investments.

We expect to grow our investment portfolio while diversifying our portfolio by tenant, facility type and geography within the healthcare sector. We plan to achieve these objectives primarily through making investments directly or indirectly in healthcare real estate, including the development of purpose-built healthcare facilities with select developers. We also intend to achieve our objective of diversifying our portfolio by tenant and facility type through select asset sales and other arrangements with our tenants.

We employ a disciplined approach in our healthcare real estate investment strategy by investing in assets that provide attractive opportunities for earnings growth and appreciation of asset values, while maintaining balance sheet strength and liquidity, thereby creating long-term stockholder value.

We elected to be treated as a REIT with the filing of our U.S. federal income tax return for the taxable year beginning January 1, 2011. We believe that we have been organized and have operated, and we intend to continue to operate, in a manner to qualify as a REIT. We operate through an umbrella partnership, commonly referred to as an UPREIT structure, in which substantially all of our properties and assets are held by Sabra Health Care Limited Partnership, a Delaware limited partnership (the “Operating Partnership”), of which we are the sole general partner and a wholly owned subsidiary of ours is currently the only limited partner, or by subsidiaries of the Operating Partnership.

Market Trends and Uncertainties

Our operations have been and are expected to continue to be impacted by economic and market conditions. Increases in interest rates and operating expenses, inflation and increased volatility in public equity and fixed income markets have led to increased costs and limited the availability of capital.

To the extent that our tenants, borrowers and Senior Housing - Managed portfolio have faced or will face the negative impacts of such conditions, they may be unable to meet their obligations to us or experience a deterioration in operating results. If our tenants and borrowers default on these obligations, such defaults could result in the determination that the full amounts of our investments are not recoverable, which could result in an impairment charge. Further, prolonged deterioration in the operating results for our investments in our Senior Housing - Managed portfolio could result in the determination that the full amounts of our investments are not recoverable, which could result in an impairment charge.

We regularly monitor the effects of economic and market conditions, as well as actions by national, state and local government administrations and regulatory agencies that affect healthcare policy and general market conditions, on our operations and financial position, as well as on the operations and financial position of our tenants and borrowers, in order to respond and adapt to the ongoing changes in our operating environment.

Acquisitions

During the nine months ended September 30, 2025, we acquired seven Senior Housing - Managed communities, three of which were acquired through a consolidated joint venture in which we have a 95% equity interest, and acquired 24 units on the campus of one of our Senior Housing - Leased communities for aggregate consideration of $283.1 million, including acquisition costs. Additionally, during the nine months ended September 30, 2025, we purchased the operations of four Senior Housing - Managed communities previously leased to the tenant under triple-net operating leases for $19.7 million. See Note 3, “Recent Real Estate Acquisitions (Consolidated),” in the Notes to Consolidated Financial Statements for additional information regarding these investments.

Dispositions

During the nine months ended September 30, 2025, we completed the sale of seven skilled nursing/transitional care facilities and one behavioral health facility for aggregate consideration, net of closing costs, of $42.9 million. The net carrying value of the assets and liabilities of these facilities was $37.4 million, which resulted in an aggregate $5.5 million net gain on sale. We continue to evaluate additional assets for sale as part of our initiative to recycle capital and further improve our portfolio quality.

Senior Unsecured Notes

On July 31, 2025, we redeemed all $500.0 million aggregate principal amount outstanding of the 5.125% senior unsecured notes due 2026. See “—Liquidity and Capital Resources—Material Cash Requirements—Senior Unsecured Notes.”

Term Loan Credit Facility

On July 30, 2025, we and certain of our subsidiaries entered into the Term Loan Credit Agreement. See “—Liquidity and Capital Resources—Material Cash Requirements—Term Loan Credit Agreement.”

At-The-Market Common Stock Offering Program

On August 5, 2025, we established the ATM Program (as defined below) pursuant to which shares of our common stock having an aggregate gross sales price of up to $750.0 million may be sold from time to time. See “—Liquidity and Capital Resources.”

Critical Accounting Policies and Estimates

Our consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and in conjunction with the rules and regulations of the Securities and Exchange Commission (the “SEC”). The preparation of our financial statements requires significant management judgments, assumptions and estimates about matters that are inherently uncertain. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. A discussion of the accounting policies that management considers critical in that they involve significant management judgments and assumptions, require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results is included in Part II, Item 7 of our 2024 Annual Report on Form 10-K filed with the SEC. There have been no significant changes to our critical accounting policies during the nine months ended September 30, 2025.

Recently Issued Accounting Standards Updates

See Note 2, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements for information concerning recently issued accounting standards updates.

Results of Operations

As of September 30, 2025, our investment portfolio consisted of 363 real estate properties held for investment, 14 investments in loans receivable, four preferred equity investments and two investments in unconsolidated joint ventures. As of September 30, 2024, our investment portfolio consisted of 373 real estate properties held for investment, 14 investments in loans receivable, five preferred equity investments and two investments in unconsolidated joint ventures. In general, we expect that income and expenses related to our portfolio will fluctuate in future periods in comparison to the corresponding prior periods as a result of investment and disposition activity and anticipated future changes in our portfolio. The results of operations presented are not directly comparable due to ongoing acquisition and disposition activity, including our capital recycling initiative.

Comparison of results of operations for the three months ended September 30, 2025 versus the three months ended September 30, 2024 (dollars in thousands):

(1) Represents the dollar amount increase (decrease) for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 as a result of investments/dispositions made after July 1, 2024.

(2) Represents the dollar amount increase (decrease) for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 that is not a direct result of investments/dispositions made after July 1, 2024.

Rental and Related Revenues

During the three months ended September 30, 2025, we recognized $85.4 million of rental income compared to $94.6 million for the three months ended September 30, 2024. The $9.2 million net decrease in rental income is related to (i) an $11.0 million decrease in rent revenue, which includes $9.3 million of non-cash revenue write-offs and a $1.7 million decrease in cash revenue, related to facilities that were transitioned to Senior Housing - Managed communities after July 1, 2024, (ii) a $2.7 million decrease from properties disposed of after July 1, 2024 and (iii) a $1.5 million decrease related to facilities that were transitioned to new operators after July 1, 2024. These decreases are partially offset by (i) a $2.3 million net increase in non-cash rent as the result of changing our estimates of collectability for certain leases within our triple-net leased portfolio, (ii) a $2.2 million net increase in cash revenue related to percentage rent, expense recoveries and leases that are not accounted for on an accrual basis, (iii) a $1.0 million increase due to lease amendments and annual rental increases based on changes in the Consumer Price Index and (iv) a $0.2 million increase from properties acquired after July 1, 2024.

Our reported rental and related revenues may be subject to increased variability in the future as a result of lease accounting standards. If at any time we cannot determine that it is probable that substantially all rents over the life of a lease are collectible, rental revenue will be recognized only to the extent of payments received and all receivables associated with the lease will be written off, irrespective of amounts expected to be collectible. However, there can be no assurances regarding the timing and amount of these revenues. Amounts due under the terms of all of our lease agreements are subject to contractual increases, and contingent rental income may be earned from certain lease agreements. No material contingent rental income was derived during the three months ended September 30, 2025 and 2024.

Our rental income in future years will be impacted by changes in inflation. Certain of our lease agreements provide for an annual rent escalator based on the percentage change in the Consumer Price Index (but not less than zero), subject to minimum or maximum fixed percentages that range from 1.0% to 5.0%.

Resident Fees and Services

During the three months ended September 30, 2025, we recognized $92.0 million of resident fees and services compared to $73.7 million for the three months ended September 30, 2024. The $18.3 million net increase is due to an $11.0 million increase related to eight Senior Housing - Managed communities acquired after July 1, 2024, a $5.4 million increase related to seven facilities that were transitioned to Senior Housing - Managed communities after July 1, 2024, a $0.6 million increase related to one Senior Housing - Managed community that was closed due to a fire in 2022 and did not fully reopen until November 2024, and the remaining increase is primarily related to increased occupancy and an increase in rates.

Interest and Other Income

Interest and other income primarily consists of income earned on our loans receivable investments and preferred returns earned on our preferred equity investments. During the three months ended September 30, 2025, we recognized $12.7 million of interest and other income compared to $9.7 million for the three months ended September 30, 2024. The net increase of $3.0 million is primarily due to a $2.5 million increase in lease termination income and a $0.6 million increase in late fee income.

Depreciation and Amortization

During the three months ended September 30, 2025, we incurred $48.5 million of depreciation and amortization expense compared to $42.7 million for the three months ended September 30, 2024. The net increase of $5.8 million is due to (i) a $4.9 million increase from properties acquired after July 1, 2024, (ii) a $1.3 million increase due to accelerating amortization of lease intangibles related to facilities that were transitioned to Senior Housing - Managed communities after July 1, 2024 and (iii) a $1.2 million increase from additions to real estate. These increases are partially offset by (i) a $0.9 million decrease from properties disposed of after July 1, 2024 and (ii) a $0.9 million decrease due to assets that have been fully depreciated.

Interest

We incur interest expense comprised of costs of borrowings plus the amortization of deferred financing costs related to our indebtedness. During the three months ended September 30, 2025, we incurred $28.9 million of interest expense compared to $29.5 million for the three months ended September 30, 2024. The $0.6 million net decrease is primarily related to a $0.9 million decrease in non-cash interest expense related to our interest rate hedges.

Triple-Net Portfolio Operating Expenses

During the three months ended September 30, 2025, we recognized $3.7 million of triple-net portfolio operating expenses compared to $4.3 million for the three months ended September 30, 2024. The $0.6 million net decrease is due to a $0.3 million decrease due to facilities that have since transitioned to new operators who are now paying the property taxes directly and a $0.2 million decrease from properties disposed of after July 1, 2024.

Senior Housing - Managed Portfolio Operating Expenses

During the three months ended September 30, 2025, we recognized $65.9 million of Senior Housing - Managed portfolio operating expenses compared to $54.2 million for the three months ended September 30, 2024. The $11.7 million net increase is primarily due to (i) a $6.7 million increase related to eight Senior Housing - Managed communities acquired after July 1, 2024, (ii) a $3.9 million increase related to seven facilities that were transitioned to Senior Housing - Managed communities after July 1, 2024, (iii) a $0.7 million increase in management fees, dining expenses and housekeeping costs due to increased occupancy, (iv) a $0.4 million increase in employee compensation primarily due to increased labor rates and staffing and (v) a

$0.3 million increase related to one Senior Housing - Managed community that was closed due to a fire in 2022 and did not fully reopen until November 2024, partially offset by a $0.3 million decrease in repairs and maintenance expense.

General and Administrative

General and administrative expenses include compensation-related expenses as well as professional services, office costs, other costs associated with asset management, and acquisition costs. During the three months ended September 30, 2025, general and administrative expenses were $12.6 million compared to $12.4 million for the three months ended September 30, 2024. The $0.2 million net increase is primarily related to increased legal and professional fees due to increased transaction activity.

Recovery of Loan Losses

During the three months ended September 30, 2025 and 2024, we recognized a $0.2 million and a $0.1 million recovery of loan losses, respectively, associated with our loans receivable investments.

Impairment of Real Estate

During the three months ended September 30, 2025, we recognized a $2.6 million impairment of real estate related to a closed facility. No impairment of real estate was recognized during the three months ended September 30, 2024.

Loss on Extinguishment of Debt

During the three months ended September 30, 2025, we recognized a $1.2 million loss on extinguishment of debt related to $2.9 million in payments made to noteholders for early redemption net of $1.7 million of write-offs associated with unamortized premium. No loss on extinguishment of debt was recognized during the three months ended September 30, 2024.

Other Expense

During the three months ended September 30, 2025, we recognized $0.8 million of other expense, including $1.2 million of lease termination expense related to four communities that were transitioned from our triple-net portfolio to Senior Housing - Managed communities, partially offset by $0.6 million of other income related to insurance proceeds received related to a fire that occurred at one of our Senior Housing - Managed communities in 2022. No other expense was recognized during the three months ended September 30, 2024.

Net Loss on Sales of Real Estate

During the three months ended September 30, 2025, we recognized an aggregate net loss of $4.4 million primarily related to the disposition of two skilled nursing/transitional care facilities. During the three months ended September 30, 2024, we recognized an aggregate net loss of $5.7 million related to the disposition of four skilled nursing/transitional care facilities.

Income from Unconsolidated Joint Ventures

During the three months ended September 30, 2025, we recognized $1.2 million of income from our unconsolidated joint ventures compared to $0.2 million of income for the three months ended September 30, 2024. The $1.0 million net improvement is primarily related to a $0.6 million increase in revenues net of operating expenses primarily due to increased occupancy and rates and a $0.5 million decrease in depreciation expense due to assets that have been fully depreciated.

Income Tax (Expense) Benefit

During the three months ended September 30, 2025, we recognized $0.4 million of income tax expense compared to $0.3 million of income tax benefit for the three months ended September 30, 2024. The $0.7 million change is primarily due to higher taxable income.

Comparison of results of operations for the nine months ended September 30, 2025 versus the nine months ended September 30, 2024 (dollars in thousands):

(1) Represents the dollar amount increase (decrease) for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 as a result of investments/dispositions made after January 1, 2024.

(2) Represents the dollar amount increase (decrease) for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 that is not a direct result of investments/dispositions made after January 1, 2024.

Rental and Related Revenues

During the nine months ended September 30, 2025, we recognized $281.2 million of rental income compared to $285.4 million for the nine months ended September 30, 2024. The $4.2 million net decrease in rental income is related to (i) an $11.7 million decrease in revenue, which includes $9.4 million of non-cash revenue write-offs and a $2.2 million decrease in cash revenue, related to facilities that were transitioned to Senior Housing - Managed communities after January 1, 2024, (ii) a $6.8 million decrease from properties disposed of after January 1, 2024 and (iii) a $0.6 million decrease related to facilities transitioned to new operators after January 1, 2024. These decreases are partially offset by (i) a $7.0 million net increase of non-cash rent as the result of changing our estimates of collectability for certain leases within our triple-net leased portfolio, (ii) a $3.2 million net increase in cash revenue related to percentage rent, expense recoveries and leases that are not accounted for on an accrual basis, (iii) a $2.9 million increase due to lease amendments and annual rental increases based on changes in the Consumer Price Index and (iv) a $1.2 million increase from properties acquired after January 1, 2024.

Our reported rental and related revenues may be subject to increased variability in the future as a result of lease accounting standards. If at any time we cannot determine that it is probable that substantially all rents over the life of a lease are collectible, rental revenue will be recognized only to the extent of payments received and all receivables associated with the lease will be written off, irrespective of amounts expected to be collectible. However, there can be no assurances regarding the timing and amount of these revenues. Amounts due under the terms of all of our lease agreements are subject to contractual increases, and contingent rental income may be earned from certain lease agreements. No material contingent rental income was derived during the nine months ended September 30, 2025 and 2024.

Resident Fees and Services

During the nine months ended September 30, 2025, we recognized $248.4 million of resident fees and services compared to $207.7 million for the nine months ended September 30, 2024. The $40.7 million net increase is due to a $23.5 million increase related to 10 Senior Housing - Managed communities acquired after January 1, 2024, a $7.8 million increase related to nine facilities that were transitioned to Senior Housing - Managed communities after January 1, 2024, a $1.9 million increase related to one Senior Housing - Managed community that was closed due to a fire in 2022 and did not fully reopen until November 2024, and the remaining increase is primarily related to increased occupancy and an increase in rates.

Interest and Other Income

Interest and other income primarily consists of income earned on our loans receivable investments and preferred returns earned on our preferred equity investments. During the nine months ended September 30, 2025, we recognized $33.1 million of interest and other income compared to $27.7 million for the nine months ended September 30, 2024. The net increase of $5.3 million is due to a $2.5 million increase in lease termination income, a $1.9 million increase in late fee income and a $1.0 million increase from investments made after January 1, 2024, partially offset by a $0.1 million decrease from investments repaid after January 1, 2024.

Depreciation and Amortization

During the nine months ended September 30, 2025, we incurred $135.6 million of depreciation and amortization expense compared to $127.3 million for the nine months ended September 30, 2024. The net increase of $8.3 million is due to (i) an $8.2 million increase from properties acquired after January 1, 2024, (ii) a $2.7 million increase from additions to real estate and (iii) a $1.5 million increase due to accelerating amortization of lease intangibles related to facilities that were transitioned to Senior Housing - Managed communities after January 1, 2024. These increases are partially offset by (i) a $2.9 million decrease from properties disposed of after January 1, 2024 and (ii) a $1.4 million decrease due to assets that have been fully depreciated.

Interest

We incur interest expense comprised of costs of borrowings plus the amortization of deferred financing costs related to our indebtedness. During the nine months ended September 30, 2025, we incurred $83.5 million of interest expense compared to $87.2 million for the nine months ended September 30, 2024. The $3.6 million net decrease is primarily related to a $3.5 million decrease in non-cash interest expense related to our interest rate hedges.

Triple-Net Portfolio Operating Expenses

During the nine months ended September 30, 2025, we recognized $10.9 million of triple-net portfolio operating expenses compared to $13.0 million for the nine months ended September 30, 2024. The $2.1 million net decrease is due to a $1.4 million decrease due to facilities that have since transitioned to new operators who are now paying the property taxes directly and a $0.6 million decrease from properties disposed of after January 1, 2024.

Senior Housing - Managed Portfolio Operating Expenses

During the nine months ended September 30, 2025, we recognized $179.8 million of Senior Housing - Managed portfolio operating expenses compared to $154.3 million for the nine months ended September 30, 2024. The $25.5 million net increase is primarily due to (i) a $14.4 million increase related to 10 Senior Housing - Managed communities acquired after January 1, 2024, (ii) a $5.8 million increase related to nine facilities that were transitioned to Senior Housing - Managed communities after January 1, 2024, (iii) a $2.4 million increase in employee compensation primarily due to increased labor rates and staffing, (iv) a $1.3 million increase in management fees, dining expenses and housekeeping costs due to increased occupancy, (v) a $1.0 million increase related to one Senior Housing - Managed community that was closed due to a fire in 2022 and did not fully reopen until November 2024 and (vi) a $0.9 million increase in utilities primarily due to increased rates and usage, partially offset by a $0.8 million decrease in repairs and maintenance expense.

General and Administrative

General and administrative expenses include compensation-related expenses as well as professional services, office costs, other costs associated with asset management, and acquisition costs. During the nine months ended September 30, 2025, general and administrative expenses were $37.8 million compared to $37.0 million for the nine months ended September 30, 2024. The $0.8 million net increase is primarily related to a $0.4 million net increase in compensation driven by changes in performance-based payout assumptions on incentive compensation and annual salary adjustments and a $0.7 million increase in legal and professional fees due to increased transaction activity. These increases are partially offset by a $0.5 million decrease in insurance expense due to lower rates.

Recovery of Loan Losses

During the nine months ended September 30, 2025 and 2024, we recognized a $0.6 million and a $0.4 million recovery of loan losses, respectively, associated with our loans receivable investments.

Impairment of Real Estate

During the nine months ended September 30, 2025, we recognized a $6.7 million impairment of real estate related to two closed facilities. During the nine months ended September 30, 2024, we recognized an $18.5 million impairment of real estate primarily related to six facilities that have sold.

Loss on Extinguishment of Debt

During the nine months ended September 30, 2025, we recognized a $1.2 million loss on extinguishment of debt related to $2.9 million in payments made to noteholders for early redemption net of $1.7 million of write-offs associated with unamortized premium. No loss on extinguishment of debt was recognized during the nine months ended September 30, 2024.

Other Income

During the nine months ended September 30, 2025, we recognized $14.0 million of other income, including the reclassification of $17.2 million of gain related to six previously terminated interest rate swaps from accumulated other comprehensive loss to other income as the related forecasted transactions were determined to be probable not to occur and $1.7 million of other income related to insurance proceeds received related to a fire that occurred at one of our Senior Housing - Managed communities in 2022, partially offset by $3.3 million of transition expenses related to the transition of Senior Housing - Managed communities to new operators and $1.2 million of lease termination expense related to the transition of four facilities from our triple-net portfolio to Senior Housing - Managed communities. During the nine months ended September 30, 2024, we recognized $0.8 million of other income primarily related to business interruption insurance income related to one Senior Housing - Managed community that was closed due to a fire in 2022.

Net Gain (Loss) on Sales of Real Estate

During the nine months ended September 30, 2025, we recognized a net gain of $5.5 million primarily related to the disposition of seven skilled nursing/transitional care facilities and one behavioral health facility. During the nine months ended September 30, 2024, we recognized an aggregate net loss of $4.0 million related to the disposition of eight skilled nursing/transitional care facilities.

Income (Loss) from Unconsolidated Joint Ventures

During the nine months ended September 30, 2025, we recognized $2.3 million of income from our unconsolidated joint ventures compared to $0.3 million of loss for the nine months ended September 30, 2024. The $2.6 million net improvement is primarily related to (i) a $1.6 million increase in revenues net of operating expenses primarily due to increased occupancy and rates, (ii) a $0.7 million decrease in depreciation expense due to assets that have been fully depreciated and (iii) a $0.3 million decrease in interest expense primarily due to decreased interest rates.

Income Tax Expense

During the nine months ended September 30, 2025 and 2024, we recognized $1.3 million and $0.6 million of income tax expense, respectively. The $0.7 million change is primarily due to higher taxable income.

Funds from Operations and Adjusted Funds from Operations

We believe that net income as defined by GAAP is the most appropriate earnings measure. We also believe that funds from operations (“FFO”), as defined in accordance with the definition used by the National Association of Real Estate Investment Trusts (“Nareit”), and adjusted funds from operations (“AFFO”) (and related per share amounts) are important non-GAAP supplemental measures of our 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 REIT that use historical cost accounting for depreciation could be less informative. Thus, Nareit created FFO as a supplemental measure of operating performance for REITs 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 our share of gains or losses from real estate dispositions related to our unconsolidated joint ventures, plus real estate depreciation and amortization, net of amounts related to noncontrolling interests, plus our share of depreciation and amortization related to our unconsolidated joint ventures, and real estate impairment charges of both consolidated and unconsolidated entities when the impairment is directly attributable to decreases in the value of the depreciable real estate held by the entity. AFFO is defined as FFO excluding 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 (recovery of) 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 noncapitalizable acquisition costs, transaction costs related to operator transitions and organizational or other restructuring activities, gain/loss on derivative instruments, and non-cash revenue and expense amounts related to noncontrolling interests) and our share of non-cash adjustments related to our unconsolidated joint ventures. We believe that the use of FFO and AFFO (and the related per share amounts), combined with the required GAAP presentations, improves the understanding of our operating results among investors and makes comparisons of operating results among REITs more meaningful. We consider 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 our operating performance between periods or as compared to other companies. While FFO and AFFO are relevant and widely used measures of operating performance of REITs, 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 our liquidity or operating performance. FFO and AFFO also do not consider the costs associated with capital expenditures related to our real estate assets nor do they purport to be indicative of cash available to fund our future cash requirements. Further, our computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other REITs that do not define FFO in accordance with the current Nareit definition or that interpret the current Nareit definition or define AFFO differently than we do.

The following table reconciles our calculations of FFO and AFFO for the three and nine months ended September 30, 2025 and 2024, to net income, the most directly comparable GAAP financial measure, for the same periods (in thousands, except share and per share amounts):

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The following table sets forth additional information related to certain other items included in net income above, and the portions of each that are included in FFO and AFFO, which may be helpful in assessing our operating results. Please refer to “—Results of Operations” above for additional information regarding these items (in millions):

Liquidity and Capital Resources

As of September 30, 2025, we had approximately $1.1 billion in liquidity, consisting of unrestricted cash and cash equivalents of $200.6 million, available borrowings under our Revolving Credit Facility (as defined below) of $717.8 million and an aggregate $157.3 million related to shares outstanding under forward sale agreements under our Prior ATM Program and ATM Program (each as defined below). The Credit Agreement and Term Loan Credit Agreement (as defined below) each contain an accordion feature that can increase the total available borrowings to $2.75 billion (from U.S. $1.4 billion plus CAD $150.0 million) and to $1.0 billion (from $500.0 million), respectively, subject to terms and conditions.

We have filed a shelf registration statement with the SEC that expires in August 2028, which allows us to offer and sell shares of common stock, preferred stock, warrants, rights, units, and certain of our subsidiaries to offer and sell debt securities, through underwriters, dealers or agents or directly to purchasers, on a continuous or delayed basis, in amounts, at prices and on terms we determine at the time of the offering, subject to market conditions.

On February 23, 2023, we established an at-the-market equity offering program (the “Prior ATM Program”) pursuant to which shares of our common stock having an aggregate gross sales price of up to $500.0 million may be sold from time to time (i) by us through a consortium of banks acting as sales agents or directly to the banks acting as principals or (ii) by a consortium of banks acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale agreement. On August 5, 2025, we terminated the Prior ATM Program pursuant to our termination rights.

During the nine months ended September 30, 2025, we utilized the forward feature of the Prior ATM Program to allow for the sale of up to 15.3 million shares of our common stock at an initial weighted average price of $17.69 per share, net of commissions. We did not utilize the forward feature of the Prior ATM Program during the three months ended September 30, 2025. During the three and nine months ended September 30, 2025, we issued 9.6 million and 11.3 million shares, respectively, in settlement of certain outstanding forward sale agreements, at a weighted average net price of $17.26 and $17.21 per share, after commissions and fees, respectively, resulting in net proceeds of $165.0 million and $194.9 million, respectively.

As of September 30, 2025, 5.5 million shares remained outstanding under the Prior ATM Program’s forward sale agreements, with an initial weighted average price of $17.96 per share, net of commissions.

No other shares were sold under the Prior ATM Program during the three and nine months ended September 30, 2025.

On August 5, 2025, we established a new at-the-market equity offering program (the “ATM Program”) pursuant to which shares of our common stock having an aggregate gross sales price of up to $750.0 million may be sold from time to time (i) by us through a consortium of banks acting as sales agents or directly to the banks acting as principals or (ii) by a consortium of banks acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale agreement.

During each of the three and nine months ended September 30, 2025, we utilized the forward feature of the ATM Program to allow for the sale of up to 3.2 million shares of our common stock at an initial weighted average price of $18.45 per share, net of commissions, and these shares remained outstanding as of September 30, 2025.

No other shares were sold under the ATM Program during the three and nine months ended September 30, 2025.

As of September 30, 2025, we had $690.9 million available under the ATM Program. Subject to market conditions, we expect to use proceeds from our ATM Program to finance future investments in properties.

Our short-term liquidity requirements consist primarily of operating expenses, including our planned capital expenditures and funding commitments, interest expense, scheduled debt service payments under our loan agreements, dividend requirements, general and administrative expenses and other requirements described under “Material Cash Requirements” below. Based on our current assessment, we believe that our available cash, operating cash flows and borrowings available to us under our Revolving Credit Facility provide sufficient funds for such requirements for the next twelve months. In addition, we do not believe that the restrictions under our Senior Notes Indentures (as defined below) or Credit Agreement significantly limit our ability to use our available liquidity for these purposes.

Our long-term liquidity requirements consist primarily of future investments in properties, including any improvements or renovations of current or newly-acquired properties, as well as scheduled debt maturities. We expect to meet these liquidity needs using the sources above as well as the proceeds from issuances of common stock, preferred stock, debt or other securities, additional borrowings, including mortgage debt or a new or refinanced credit facility, and proceeds from the sale of properties. In addition, we may seek financing from U.S. government agencies, including through Fannie Mae, Freddie Mac and the U.S. Department of Housing and Urban Development, in appropriate circumstances in connection with acquisitions.

Cash Flows from Operating Activities

During the nine months ended September 30, 2025, net cash provided by operating activities was $261.2 million. Operating cash inflows were derived primarily from the rental payments received under our lease agreements, resident fees and services net of the corresponding operating expenses, and interest payments from borrowers under our loan and preferred equity investments. Operating cash outflows consisted primarily of interest payments on borrowings and payment of general and administrative expenses, including corporate overhead. Increases to operating cash flows primarily relate to completed investment activity and decreases to operating cash flows primarily relate to disposition activity. Interest payment outflows are impacted by increases or decreases in borrowings and changes in interest rates. In addition, the change in operating cash flows was impacted by the timing of collections from our tenants and borrowers and fluctuations in the operating results of our Senior Housing - Managed communities. We expect our annualized cash flows provided by operating activities to fluctuate as a result of such activity.

Cash Flows from Investing Activities

During the nine months ended September 30, 2025, net cash used in investing activities was $261.4 million and included $301.6 million used for the acquisition of seven facilities, additional units on the campus of one of our facilities and the operations of four Senior Housing - Managed communities previously leased under triple-net operating leases, $24.2 million used for additions to real estate, $5.7 million used to provide funding for loans receivable, $1.2 million used for the investment in an unconsolidated joint venture and $0.5 million of escrow deposits for potential investments, partially offset by $43.1 million of net proceeds from the sale of real estate, $15.4 million in repayments of loans receivable, $5.6 million of distributions in excess of earnings from unconsolidated joint ventures, $4.5 million of proceeds from net investment hedges, $2.0 million in repayments of preferred equity investments and $1.3 million in insurance proceeds.

Cash Flows from Financing Activities

During the nine months ended September 30, 2025, net cash provided by financing activities was $141.7 million and included $500.0 million of proceeds from the Term Loan Credit Agreement (as defined below), $188.4 million of net proceeds from shares sold through our Prior ATM Program, net of costs related to payroll tax payments related to the issuance of common stock pursuant to equity compensation arrangements, $174.8 million of net borrowings from our Revolving Credit Facility and $2.0 million of contributions from noncontrolling interests, partially offset by $500.0 million of principal payments to redeem the 2026 Notes, $214.7 million of dividends paid to stockholders, $4.4 million of payments of deferred financing costs primarily related to the Term Loan Credit Agreement, $2.9 million of payments to noteholders for the early redemption of the 2026 Notes and $1.6 million of principal repayments on secured debt.

Please see the accompanying consolidated statements of cash flows for details of our operating, investing and financing cash activities.

Material Cash Requirements

Our material cash requirements include the following contractual and other obligations.

Senior Unsecured Notes. Our senior unsecured notes consisted of the following (collectively, the “Senior Notes”) as of September 30, 2025 (dollars in thousands):

(1) Principal balance does not include discount, net of $7.1 million and deferred financing costs, net of $7.8 million as of September 30, 2025.

On July 31, 2025, we redeemed all $500.0 million aggregate principal amount outstanding of our 5.125% senior unsecured notes due 2026 (the “2026 Notes”) at a premium of 100.575%, plus accrued and unpaid interest. As a result of the redemption, we recognized $1.2 million of redemption related costs and write-offs, consisting of $2.9 million in payments made to noteholders for early redemption net of $1.7 million of write-offs associated with unamortized premium.

See Note 8, “Debt,” in the Notes to Consolidated Financial Statements and “Subsidiary Issuer and Guarantor Financial Information” below for additional information concerning the Senior Notes, including information regarding the indentures and agreements governing the Senior Notes (the “Senior Notes Indentures”). As of September 30, 2025, we were in compliance with all applicable covenants under the Senior Notes Indentures.

Credit Agreement. Effective January 4, 2023, the Operating Partnership and Sabra Canadian Holdings, LLC (together, the “Borrowers”), and the other parties thereto entered into a sixth amended and restated unsecured credit agreement (the “Credit Agreement”). The Credit Agreement includes a $1.0 billion revolving credit facility (the “Revolving Credit Facility”), a $430.0 million U.S. dollar term loan and a CAD $150.0 million Canadian dollar term loan (collectively, the “Term Loans”). Further, up to $350.0 million of the Revolving Credit Facility may be used for borrowings in certain foreign currencies. The Credit Agreement also contains an accordion feature that can increase the total available borrowings to $2.75 billion, subject to terms and conditions.

The Revolving Credit Facility has a maturity date of January 4, 2027, and includes two six-month extension options. The Term Loans have a maturity date of January 4, 2028.

The obligations of the Borrowers under the Credit Agreement are guaranteed by us and certain of our subsidiaries.

See Note 8, “Debt,” in the Notes to Consolidated Financial Statements for additional information concerning the Credit Agreement, including information regarding covenants contained in the Credit Agreement. As of September 30, 2025, we were in compliance with all applicable covenants under the Credit Agreement.

Term Loan Credit Agreement. On July 30, 2025, the Borrowers, Sabra and the other parties thereto entered into an unsecured credit agreement for a $500.0 million U.S. dollar term loan which matures on July 30, 2030 (the “Term Loan Credit Agreement”). The proceeds were used to redeem the 2026 Notes. The Term Loan Credit Agreement also contains an accordion feature that can increase the total available borrowings to $1.0 billion, subject to terms and conditions.

See Note 8, “Debt,” in the Notes to Consolidated Financial Statements for additional information concerning the Term Loan Credit Agreement.

Secured Indebtedness. As of September 30, 2025, eight of our properties held for investment were subject to secured indebtedness to third parties, and our secured debt consisted of the following (dollars in thousands):

(1) Principal balance does not include deferred financing costs, net of $0.8 million as of September 30, 2025.

Interest. Our estimated interest and facility fee payments based on principal amounts of debt outstanding as of September 30, 2025, applicable interest rates in effect as of September 30, 2025, and including the impact of interest rate swaps are $38.9 million for the remainder of 2025, $110.0 million in 2026, $89.5 million in 2027, $40.9 million in 2028, $63.8 million in 2029 and $74.2 million thereafter.

Capital and Other Expenditures and Funding Commitments. For the nine months ended September 30, 2025 and 2024, our aggregate capital expenditures were $24.2 million and $39.2 million, respectively. As of September 30, 2025, our aggregate commitment for future capital and other expenditures related to facilities leased under triple-net operating leases was approximately $18 million, of which $16 million will directly result in incremental rental income, and approximately $8 million will be spent over the next 12 months. We also expect to fund capital expenditures related to our Senior Housing - Managed communities.

In addition, as of September 30, 2025, we have committed to provide up to $0.4 million of future funding related to two loan receivable investments.

Dividends. To maintain REIT status, we are required each year to distribute to stockholders at least 90% of our annual REIT taxable income after certain adjustments. All distributions will be made by us at the discretion of our board of directors and will depend on our financial position, results of operations, cash flows, capital requirements, debt covenants (which include limits on distributions by us), applicable law, and other factors as our board of directors deems relevant.

We paid dividends of $214.7 million on our common stock during the nine months ended September 30, 2025. On November 5, 2025, our board of directors declared a quarterly cash dividend of $0.30 per share of common stock. The dividend will be paid on November 28, 2025 to common stockholders of record as of November 17, 2025.

Subsidiary Issuer and Guarantor Financial Information. The 2029 Notes and 2031 Notes are issued by the Operating Partnership and guaranteed, fully and unconditionally, by us.

These guarantees are subordinated to all existing and future senior debt and senior guarantees of us, as guarantor, and are unsecured. We conduct all of our business through and derive virtually all of our income from our subsidiaries. Therefore, our ability to make required payments with respect to our indebtedness (including the Senior Notes) and other obligations depends on the financial results and condition of our subsidiaries and our ability to receive funds from our subsidiaries.

In accordance with Regulation S-X, the following aggregate summarized financial information is provided for Sabra and the Operating Partnership. This aggregate summarized financial information has been prepared from the books and records maintained by us and the Operating Partnership. The aggregate summarized financial information does not include the investments in, nor the earnings from, subsidiaries other than the Operating Partnership and therefore is not necessarily indicative of the results of operations or financial position had the Operating Partnership operated as an independent entity. Intercompany transactions have been eliminated. The aggregate summarized balance sheet information as of September 30, 2025 and December 31, 2024 and aggregate summarized statement of loss information for the nine months ended September 30, 2025 is as follows (in thousands):

Concentration of Credit Risk

Concentrations of credit risk arise when a number of tenants or obligors related to our investments are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to us, to be similarly affected by changes in economic conditions. We regularly monitor our portfolio to assess potential concentrations of risks.

Management believes our current portfolio is reasonably diversified across healthcare related real estate and geographical location and does not contain any other significant concentration of credit risks. Our portfolio of 363 real estate properties held for investment as of September 30, 2025 is diversified by location across the U.S. and Canada.

For the three and nine months ended September 30, 2025, no tenant relationship represented 10% or more of our total revenues.

Medicare Reimbursement Rates

For the nine months ended September 30, 2025, 37.1% of our revenues was derived directly or indirectly from skilled nursing/transitional care facilities. Medicare reimburses skilled nursing facilities for Medicare Part A services under the Prospective Payment System (“PPS”), as implemented pursuant to the Balanced Budget Act of 1997 and modified pursuant to subsequent laws, most recently the Patient Protection and Affordable Care Act of 2010. PPS regulations predetermine a payment amount per patient, per day, based on a market basket index calculated for all covered costs.

On April 22, 2024, the Centers for Medicare & Medicaid Services (“CMS”) issued a final rule that (i) establishes minimum nurse staffing requirements for long-term care facilities (the “Minimum Staffing Standards”) and (ii) requires facilities to meet new facility assessment requirements (the “Assessment Requirements”). The Minimum Staffing Standards became effective on June 21, 2024 with a multi-year phase-in period. The compliance deadline for the Assessment Requirements was August 8, 2024. On April 7, 2025, a federal judge vacated the Minimum Staffing Standards, and on July 4, 2025, H.R. 1 was signed into law which includes a 10-year moratorium on CMS enforcement of the Minimum Staffing Standards. However, the Assessment Requirements remain in effect and we expect that this will exacerbate the staffing challenges already faced by our tenants.

On July 31, 2024, CMS issued a final rule regarding fiscal year 2025 Medicare rates for skilled nursing facilities providing an estimated net increase of 4.2% compared to fiscal year 2024 (comprised of (i) a market basket increase of 3.0% plus (ii) a market basket forecast error adjustment of 1.7% and less (iii) a productivity adjustment of 0.5%). These figures do not incorporate any of the estimated value-based purchasing reductions for skilled nursing facilities. The new payment rates became effective on October 1, 2024. Additionally, the rule expands the civil monetary penalties (“CMP”) that can be imposed for noncompliance to allow for more CMPs per instance and per day.

On July 31, 2025, CMS issued a final rule regarding fiscal year 2026 Medicare rates for skilled nursing facilities providing an estimated net increase of 3.2% compared to fiscal year 2025 (comprised of (i) a market basket increase of 3.3% plus (ii) a market basket forecast error adjustment of 0.6% and less (iii) a productivity adjustment of 0.7%). These figures do not incorporate any of the estimated value-based purchasing reductions for skilled nursing facilities. The new payment rates became effective on October 1, 2025.

There have been no material changes to the quantitative and qualitative disclosures about market risk set forth in our 2024 Annual Report on Form 10-K.

Disclosure Controls and Procedures

As of the end of the period covered by this report, management, including our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based upon, and as of the date of, the evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2025 to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes in our assessment of our risk factors from those set forth in Part I, Item 1A of our 2024 Annual Report on Form 10-K.