Sabra Sets 2026 Guidance as SHOP Growth Supports Earnings

Sabra Health Care REIT, Inc. (NASDAQ: SBRA) set updated 2026 guidance that implies approximately 7% year-over-year growth in normalized funds from operations per share at the midpoint, as expansion in its senior housing operating portfolio and continued investment activity support earnings growth.

The healthcare REIT expects 2026 normalized FFO of $1.54 to $1.55 per diluted share and normalized adjusted FFO of $1.60 to $1.61. The respective midpoints imply year-over-year growth of about 7% and 8%, according to the presentation. Sabra also forecasts GAAP net income of $0.265 to $0.275 per share, FFO of $1.145 to $1.155 and AFFO of $1.625 to $1.635.

The outlook assumes mid-teens full-year Cash NOI growth for the same-store senior housing operating portfolio, or SHOP, and low-single-digit Cash NOI growth at the midpoint for the triple-net portfolio, excluding acquisitions, dispositions and completed or planned tenant transitions. It also incorporates general and administrative expenses of $63 million and cash interest expense of $106 million at their respective midpoints.

The guidance includes only investments, dispositions and capital-markets activity completed as of Nov. 2, leaving Sabra’s awarded investment pipeline outside the forecast.

Senior housing drives portfolio growth

Same-store SHOP NOI margin reached 34.9% in the third quarter, while same-store revenue per occupied room rose 7.3%. Sabra said SHOP accounted for 34% of NOI and that its share is on a path toward 40% through organic growth and investment activity, with a subsequent target of 50% and a longer-term goal above that level.

The company’s senior housing portfolio totaled $3.0 billion as of Sept. 30 and generated a 7.6% Cash NOI yield on gross book value. SHOP represented 86% of senior housing NOI. Since 2021, same-store SHOP NOI has produced a compound annual growth rate above 17%, while margins have increased by 13 percentage points, the presentation showed.

Sabra has also expanded the platform through acquisitions. The company closed nearly $750 million of investments year to date, about 80% of which were SHOP assets, at an estimated yield of 8.0%. Its awarded investment pipeline stood at roughly $425 million, mostly comprising SHOP properties, with an estimated yield of 7.0%.

SHOP investments completed in 2024 and 2025 were generating an in-place yield of 8.7% as of Sept. 30, ahead of the company’s initial underwriting. Sabra said the yield on its SHOP investments increased by more than 260 basis points from 2023 through 2026.

Skilled nursing leases offer potential rent resets

Sabra’s $2.8 billion skilled nursing portfolio generated a 9.9% Cash NOI yield on gross book value and had EBITDARM rent coverage of 2.52 times. Skilled nursing and transitional care represented 48% of annualized NOI, compared with 33.9% for SHOP and 7% for leased senior housing.

Management identified lease maturities as a potential source of additional rent. Almost half of skilled nursing NOI comes from leases maturing through 2031, and the company said current coverage levels could support fair-market rent resets as those agreements expire.

The transition of facilities previously leased to Avamere illustrated that strategy. Sabra initially fixed annual rent at $48 million in February 2026, 17% above the rent received in 2025. After Avamere’s founder indicated a desire to leave the skilled nursing business, the properties were transferred to Cascadia and Ensign under long-term leases. Annualized rent increased to $53 million, nearly 30% above the amount paid in 2025.

Liquidity supports investment activity

Sabra reported $1.2 billion of total liquidity as of Sept. 30. Net debt to adjusted EBITDA was 4.54 times, debt equaled 35% of asset value and secured debt represented 1% of asset value. The REIT’s interest coverage ratio was 5.17 times, while its fixed-charge coverage ratio was 5.06 times. The cost of permanent consolidated debt was 3.92%, excluding the revolving credit facility balance.

The company had $6.6 billion of investments and 60 operator relationships at quarter-end, with its largest relationship accounting for 8.4% of annualized NOI. Senior housing represented 41% of annualized NOI when SHOP, leased properties and relevant loan and preferred-equity investments were included.

Sabra is also investing in data and technology intended to support underwriting and property operations. Management expects the integration of artificial intelligence into its investment process to increase capacity, while operators have implemented tools for monitoring vital signs, identifying fall risks and supporting clinical care. The company said findings from a study of five fall-related technologies are expected to be applied in SHOP assisted-living and memory-care assets in 2027.

The outlook remains subject to execution and operating risks. Sabra noted that awarded investments may not result in definitive agreements or close on expected terms. Other uncertainties include interest rates, inflation, labor costs and shortages, operator performance, healthcare regulation, reimbursement exposure, tenant or borrower insolvency, insurance costs, access to capital and the operational risks associated with SHOP communities. Because the portfolio is concentrated in healthcare real estate—particularly skilled nursing and senior housing—a downturn in either segment could have a disproportionate effect on results.