Sabra Health Care REIT Aims to Increase SHOP Exposure to 40%
Sabra Health Care REIT (NASDAQ: SBRA) has reported that its senior housing portfolio has “exceeded expectations.” CEO Rick Matros announced plans to expand the company’s Senior Housing Operating Portfolio (SHOP) to represent 40% of its total portfolio by unit count in the future.
Currently, Sabra’s SHOP segment accounts for approximately 26% of its total portfolio unit count. Earlier this year, the company successfully increased its SHOP concentration from 20% to 30% in the second quarter. As Sabra approaches its new target, Matros indicated that the REIT “will reset that target again.”
In the third quarter of 2025, Sabra added 10 senior living properties to its SHOP portfolio, which now includes 83 properties spanning 8,282 units. This expansion contributed to a rise in cash net operating income, reaching $26 million.
During the same quarter, Sabra made significant acquisitions, purchasing six communities for $217.5 million, with an anticipated cash yield of 7.7%. Additionally, the company converted four communities from triple-net lease structures to its SHOP segment, investing $19.7 million to purchase operations and terminate existing leases in favor of management agreements.
Looking ahead, Matros expressed confidence that Sabra would continue to “exceed the high end of our investment targets,” aiming for over $500 million in acquisitions in 2025. He noted that the investment pipeline remains “robust.”
Matros emphasized that Sabra’s SHOP assets are a “much stronger driver of earnings growth” compared to its triple-net lease portfolio. According to Sabra Executive Vice President Darrin Smith, an estimated 90% to 95% of the existing investment pipeline consists of SHOP assets, with the remainder focused on skilled nursing investments. “I would expect us to be heavily weighted towards SHOP moving forward,” Smith stated.
Currently, Sabra is concentrating on acquiring “recent vintage assets” while avoiding value-add opportunities. “The dynamics are dramatically different right now,” Matros explained. “You’ve got demographics that everybody’s been waiting for three decades to kick in. We’ve got several years of runway, if not longer, before new supply has any impact.”
Matros likened the current abundance of deal opportunities to the skilled nursing investment environment prior to the 2020 Covid-19 pandemic, when there were ample investment opportunities “for all of us to get our fair share.”
In 2026, Matros projected “mid-single digit” rental rate increases as ownership groups and operators adopt a more conservative approach to rates in the upcoming year.
For the third quarter, Sabra reported funds from operations per diluted share at $0.33, a slight decrease of $0.01 compared to the same period last year. Following these developments, Sabra’s stock rose by 3.57% on Thursday, increasing by $0.65 to settle at $18.85 per share.
Sabra Health Care REIT (NASDAQ: SBRA) has reported that its senior housing portfolio has “exceeded expectations.” CEO Rick Matros announced plans to expand the company’s Senior Housing Operating Portfolio (SHOP) to represent 40% of its total portfolio by unit count in the future.
Currently, Sabra’s SHOP segment accounts for approximately 26% of its total portfolio unit count. Earlier this year, the company successfully increased its SHOP concentration from 20% to 30% in the second quarter. As Sabra approaches its new target, Matros indicated that the REIT “will reset that target again.”
In the third quarter of 2025, Sabra added 10 senior living properties to its SHOP portfolio, which now includes 83 properties spanning 8,282 units. This expansion contributed to a rise in cash net operating income, reaching $26 million.
During the same quarter, Sabra made significant acquisitions, purchasing six communities for $217.5 million, with an anticipated cash yield of 7.7%. Additionally, the company converted four communities from triple-net lease structures to its SHOP segment, investing $19.7 million to purchase operations and terminate existing leases in favor of management agreements.
Looking ahead, Matros expressed confidence that Sabra would continue to “exceed the high end of our investment targets,” aiming for over $500 million in acquisitions in 2025. He noted that the investment pipeline remains “robust.”
Matros emphasized that Sabra’s SHOP assets are a “much stronger driver of earnings growth” compared to its triple-net lease portfolio. According to Sabra Executive Vice President Darrin Smith, an estimated 90% to 95% of the existing investment pipeline consists of SHOP assets, with the remainder focused on skilled nursing investments. “I would expect us to be heavily weighted towards SHOP moving forward,” Smith stated.
Currently, Sabra is concentrating on acquiring “recent vintage assets” while avoiding value-add opportunities. “The dynamics are dramatically different right now,” Matros explained. “You’ve got demographics that everybody’s been waiting for three decades to kick in. We’ve got several years of runway, if not longer, before new supply has any impact.”
Matros likened the current abundance of deal opportunities to the skilled nursing investment environment prior to the 2020 Covid-19 pandemic, when there were ample investment opportunities “for all of us to get our fair share.”
In 2026, Matros projected “mid-single digit” rental rate increases as ownership groups and operators adopt a more conservative approach to rates in the upcoming year.
For the third quarter, Sabra reported funds from operations per diluted share at $0.33, a slight decrease of $0.01 compared to the same period last year. Following these developments, Sabra’s stock rose by 3.57% on Thursday, increasing by $0.65 to settle at $18.85 per share.
