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Sabra Health Care and Care Capital Properties to Combine in $7.4BN Transaction to Create a Premier Healthcare REIT

Combined company to have a diversified portfolio of 564 investments across 43 states and Canada Transaction expected to be immediately accretive Credit enhancing to all stakeholders

IRVINE, Calif. & CHICAGO, May 07, 2017 –Sabra Health Care REIT, Inc. (Nasdaq:SBRA, Nasdaq:SBRAP) and Care Capital Properties, Inc. (NYSE:CCP) announced today that they have entered into a definitive agreement pursuant to which the two companies will combine in an all-stock merger to create a premier healthcare REIT. The combined company is expected to have a pro forma total market capitalization of approximately $7.4 billion and an equity market capitalization of approximately $4.3 billion.

Under the terms of the agreement, CCP shareholders will receive 1.123 shares of Sabra common stock for each share of CCP common stock they own. Upon closing of the merger, Sabra shareholders are expected to own approximately 41% and the former CCP shareholders are expected to own approximately 59% of the combined company. The merger is subject to customary closing conditions, including receipt of the approval of both Sabra and CCP shareholders. The parties currently expect the transaction to close during the third quarter of 2017. The all-stock merger is intended to be a tax-free transaction.


The merger of Sabra and CCP creates significant financial and operational benefits:

  • Creates a premier healthcare REIT: The merger brings together two high quality companies with complementary properties creating a unique healthcare portfolio of 564 investments. The combined company will have 70 high quality relationships across 43 states and Canada, creating enhanced growth opportunities to strategically partner with top operators.
  • Increased diversification and scale: The combination of Sabra’s and CCP’s portfolios will significantly improve both REITs’ tenant diversification by operator, geography and asset type. No one tenant will represent more than 11% of the annualized net operating income of the combined company after giving effect to Sabra’s previously announced Genesis dispositions and CCP’s previously announced closing on the behavioral hospitals.
  • Outstanding credit metrics and cost of capital advantage: The combined company expects to have modest leverage, excellent liquidity and strong fixed charge coverage, with pro forma investment grade credit metrics. Sabra and CCP believe the greater scale will promote investor interest and increased shareholder liquidity, positioning the combined company to benefit from a more attractive cost of capital, allowing it to successfully compete for future investment opportunities.
  • Immediately accretive: The merger is expected to generate annual cost savings of approximately $20 million. The transaction is expected to be immediately accretive to Sabra’s FFO and AFFO per share and provide the combined company with an attractive earnings growth profile. CCP shareholders will gain immediate benefits through the exchange ratio and improved opportunity for superior shareholder returns through increased growth in the combined company.
  • Poised for growth and value creation: The transaction adds to both REITs’ stable asset bases, and positions the combined company to create a balanced portfolio in the assisted living, independent living and skilled nursing facility asset classes. The more extensive asset base gives the combined company additional flexibility to recycle capital and actively manage the portfolio without sacrificing earnings growth.
  • Attractive dividend: On a combined basis the dividend will be well covered and be an important and attractive part of the overall shareholder return.

Rick Matros, CEO and Chairman of Sabra stated: “We are excited to announce this transformative transaction that brings together two highly complementary portfolios in a merger we believe to have considerable benefits for all stakeholders. We have reshaped, diversified and enhanced the Sabra portfolio and this transaction represents a logical and substantial next step on that journey. Our balance sheet and access to capital will enable us to continue investing in senior housing assets to balance our portfolio mix, as we did after our spin-off. The increased scale and portfolio diversification, strengthened balance sheet and earnings profile delivered through the merger position us to capitalize on the opportunity set in front of us in an industry that continues to have attractive fundamentals.”

Raymond Lewis, CEO of CCP stated: “This is an outstanding outcome for the shareholders of both companies. Since becoming a public company in August of 2015, CCP has worked hard to reposition our portfolio for success and growth with strategic operators. The combined company will have a diversified portfolio of quality operators and assets, with strong free cash flow, a rock solid balance sheet and a highly competitive cost of capital. This solid foundation will enable it to compete and win in the dynamic and growing healthcare real estate market. Rick and his team have a strong track record of delivering on their commitments and producing results and I look forward to supporting them as they continue with this exciting next step.”

Leadership and Organization
The current management team of Sabra will lead the combined company, with Rick Matros to serve as Chairman and CEO, Harold Andrews as CFO and Talya Nevo-Hacohen as CIO. The Sabra Board of Directors will be expanded to 8 members, adding CCP’s current CEO Raymond Lewis and two additional directors from CCP. Upon completion of the merger, the company will operate under the Sabra name and its common stock will be listed under the ticker symbol SBRA (NASDAQ). The company will be headquartered in Irvine, California.

UBS Investment Bank is acting as financial advisor to Sabra and O’Melveny & Myers LLP and Fried, Frank, Harris, Shriver & Jacobson LLP are acting as legal advisors to Sabra. BofA Merrill Lynch is acting as lead financial advisor and Barclays is acting as financial advisor to CCP. Sidley Austin LLP is acting as legal advisor to CCP.

About Sabra
Sabra Health Care REIT, Inc. (NASDAQ:SBRA), a Maryland corporation, operates as a self-administered, self-managed real estate investment trust (a “REIT”) that, through its subsidiaries, owns and invests in real estate serving the healthcare industry. Sabra leases properties to tenants and operators throughout the United States and Canada.

About CCP
Care Capital Properties, Inc. is a healthcare real estate investment trust with a diversified portfolio of triple-net leased properties, focused on the post-acute sector. CCP’s skilled management team is fully invested in delivering excellent returns by forging strong relationships with shareholders, operators, and employees.