Sabra Health Care Swings to Loss on $102.4 Million Reserve Charge
Sabra Health Care REIT (SBRA) posted a $25.2 million net loss for the second quarter after a one-time $102.4 million provision for loan losses masked underlying growth in its managed senior housing portfolio.
Sabra Health Care REIT (SBRA) reported a net loss attributable to common shareholders of $25.2 million, or $(0.10) a diluted share, in the second quarter of 2026, reversing net income of $65.5 million, or $0.27 a diluted share, in the same period last year. The swing was driven primarily by a $102.4 million provision for loan losses and other reserves, compared with a $0.2 million recovery a year earlier.
The reserve charge was large enough to pull GAAP funds from operations per diluted share to $(0.02) from $0.44 a year ago. Normalized FFO per diluted share, which strips out the one-time provision, rose to $0.38 from $0.37, and Normalized AFFO per diluted share increased to $0.40 from $0.38. The gap between the GAAP and normalized figures illustrates how a single balance-sheet item can overwhelm otherwise steady operating performance.
The healthcare REIT's total revenues rose 24.7% to $235.9 million from $189.2 million, led by resident fees and services in its senior housing - managed segment, which grew 63.1% to $128.8 million from $79.0 million. Rental and related revenues, tied to the company's triple-net leased properties, grew just 1.5% to $101.3 million from $99.8 million, underscoring a continued mix shift toward the managed portfolio.
Operating expenses in the managed senior housing segment rose 54.4% to $88.6 million from $57.4 million, a slower pace than the segment's 63.1% revenue growth. Same-property managed senior housing cash net operating income increased 13.7% year over year, due to margin growth and higher occupancy across both its consolidated and unconsolidated managed portfolios.
In the triple-net segment, EBITDARM coverage for skilled nursing and transitional care properties improved again to 2.49 times. Coverage and occupancy declined in the triple-net senior housing - leased segment, due to the conversion of a high-performing triple-net asset into the managed portfolio rather than to underlying deterioration. Separately, the company's Avamere lease reset annualized fixed cash rent to $48 million, up 17% from the $41 million paid in full-year 2025, retroactive to February 1, 2026, and producing a $1.8 million to $1.9 million catch-up adjustment to FFO and AFFO this quarter ahead of a previously announced transition.
Sabra closed $274.1 million of investments in the second quarter at an average initial cash yield of 8.1%, and closed an additional $223.0 million after quarter-end, bringing year-to-date closed investments to roughly $600.0 million at a blended 7.5% yield. Another $100 million is awarded or under letter of intent at approximately 7.7% yield and is expected to close by year end.
The company funded that pipeline in part through its at-the-market forward equity program: common shares outstanding grew to 255.5 million as of June 30, 2026, from 251.7 million at the end of 2025, with 21.4 million shares still outstanding under forward sale agreements at a weighted average price of $19.24 a share. Net debt to Adjusted EBITDA fell to 4.61 times as of June 30, 2026, from 4.8 times noted in the July 21, 2026 business update, aided by a cash balance that climbed to $231.6 million from $71.5 million at the end of 2025.
Sabra also booked a $37.7 million net gain on real estate sales in the quarter, up from $10.0 million a year earlier, a disposition gain that helped offset an operating loss driven by the reserve charge. The company reiterated its full-year 2026 guidance unchanged from the July 21, 2026 business update.