CCP, Sabra to Create Healthcare Giga-REIT

The combined company is expected to have an equity market capitalization of $4.3 billion and a pro forma market cap of about $7.4 billion.

Sabra Health Care REIT Inc., of Irvine, Calif., and Care Capital Properties Inc., of Chicago, have agreed to combine in an all-stock merger, the two REITs announced over the weekend.

Irvine Towers in Irvine, Calif.
Sabra Health Care REIT HQ at Irvine Towers in Irvine, Calif.

Retaining the Sabra name, its SBRA ticker symbol on NASDAQ and its headquarters in Irvine, Calif., the combined company is expected to have an equity market capitalization of about $4.3 billion and a pro forma total market cap of about $7.4 billion. The combined company will have a diversified portfolio of 564 investments across 43 states and Canada.

On the merger’s closing, Sabra shareholders are expected to own about 41 percent and former CCP shareholders about 59 percent of the combined company, respectively. Subject to approval of both companies’ shareholders, the merger is expected to close during the third quarter.

Neither CCP nor Sabra responded to Commercial Property Executive’s requests for additional information.

CCP focuses on triple-net leased properties in the post-acute sector.

As of Dec. 31, 2016, Sabra’s portfolio included 97 skilled nursing/transitional care facilities, 85 senior housing facilities and one acute care hospital, totaling nearly 18,900 beds/units across the United States and Canada.

The combination of the two portfolios reportedly will improve both REITs’ tenant diversification by operator, geography and asset type, with no single tenant representing more than 11 percent of the annualized NOI of the combined company.

“Our balance sheet and access to capital will enable us to continue investing in senior housing assets to balance our portfolio mix,” Sabra CEO & chairman Rick Matros said in a prepared statement.

“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,” added Raymond Lewis, CEO of CCP.

Sabra’s current management will head the combined company, with Matros as chairman & CEO, Harold Andrews as CFO and Talya Nevo-Hacohen as CIO. The Sabra board will be expanded to eight members, adding CCP’s Lewis and two additional directors from CCP.

Image courtesy of Flickr user bigmikelakers