Sabra Health Issues Update on Capital Markets Strategy, Says FY13 Adj. FFO Will Be Cut by $0.01/Share

Certain subsidiaries of SabraHealth Care REIT, Inc. ("Sabra," the "Company" or "we") (Nasdaq: SBRA)completed the issuance of $200 million aggregate principal amount of 5.375%senior notes due 2023 (the "2023 Notes"). Sabra expects to use a portion ofthe net proceeds of the offering to redeem $113.8 million of the 8.125% seniornotes due 2018 (the "2018 Notes") of certain of its subsidiaries. The 2018Notes permit us to redeem up to 35% of the outstanding 2018 Notes with anamount equal to the net cash proceeds of certain equity offerings, includingthe March 2013 offering of our Series A Cumulative Redeemable Preferred Stock.On May 23, 2013, the issuers of the 2018 Notes issued a notice of redemptionfor $113.8 million of the 2018 Notes, providing for a redemption price of108.125% of the principal amount being redeemed, plus accrued and unpaidinterest thereon to the date of redemption. Sabra expects to use the remainderof the net proceeds from the offering of the 2023 Notes of approximately $71.6million to fund future possible acquisitions and for general corporatepurposes.  The issuance of the 2023 Notes and the redemption of a portion of the 2018Notes will result in net additional cash expenditures for interest and theredemption premium of $0.8 million when compared to waiting to call the sameamount of the 2018 Notes at the first call date of November 1, 2014 at104.063%.  These transactions are expected to result in AFFO dilution of $0.01in fiscal 2013, excluding the one-time redemption premium payment of $9.2million and assuming the excess cash is invested by the end of the thirdquarter of 2013, and are expected to be $0.03 accretive in 2014 assuming theexcess funds are invested prior to the beginning of 2014. After adjusting forthe repayment of $7.3 million of mortgage debt subsequent to March 31, 2013,the issuance of the 2023 Notes and the redemption of a portion of the 2018Notes, our weighted average interest rate on our total debt as of March 31,2013 declines from 6.77% to 6.04% on a pro forma basis and the maturity dateof 24% of our total outstanding debt at March 31, 2013 extends from 2018 to2023. The excess cash of $71.6 million increases our pro forma liquidity as ofMarch 31, 2013 to $311.8 million.  When combined with the additional borrowingcapacity of $36.0 million under Sabra's secured revolving credit facility andthe potential for additional capital from the $100.0 million ATM program, theCompany has access to capital of up to $447.8 million for future acquisitionactivities.  Sabra has updated its 2013 guidance to account for these transactions as wellas actual activity through the first quarter as shown below. Commenting on the transactions, Rick Matros, Chairman and CEO said, "Ourapproach to the capital markets has been and continues to be opportunistic asevidenced by the $100 million add-on to the 2018 Notes we completed lastsummer and the preferred equity offering we completed earlier this year.  Wecontinue to focus on proactive steps to improve our credit rating with theprincipal goal of achieving investment grade status. That will take time. Given the current robust capital market environment, we were able tosuccessfully complete the issuance of the 2023 Notes at a rate thathistorically has been reserved for investment grade companies. The preferredequity offering created the opportunity to claw back 35% of the 2018 Notesmaking it possible to issue the 2023 Notes on a basis that will be accretiveto 2014 AFFO, the first full year it is in place, after investing the excessproceeds. We expect interest rates will increase over time, so we havepositioned ourselves to have enough liquidity to grow the Company to the pointwhere we believe we can make a strong case for the ratings agencies to upgradeour ratings and thereby allow us to continue to improve our cost of capitaldespite the potential for an increasing interest rate environment. We remainconfident regarding our ability to deploy our capital consistent with ourinvestment goals. We will continue to target high quality senior housing andpost-acute assets as well as look to expand our development projects."2013 Outlook UpdateThe Company has updated its 2013 guidance to take into account the issuance ofthe 2023 Notes, redemption of $113.8 million of the 2018 Notes and investmentsthrough March 31, 2013 of $17.5 million. In addition, the updated 2013guidance no longer contemplates an issuance of $75.0 to $100.0 million ofequity securities in 2013.For fiscal 2013 the Company expects FFO to range between $1.53 and $1.57 perdiluted common share and Normalized FFO, after adjusting for the redemptionpremium, write-off of deferred financing costs and issuance premiumsassociated with the redemption of $113.8 million of the 2018 Notes, to rangebetween $1.79 and $1.83 per diluted common share. The Company expects AFFO forfiscal 2013 to range between $1.42 and $1.46 per diluted common share andNormalized AFFO, after adjusting for the redemption premium, to range between$1.66 and $1.70 per diluted common share. The Company expects net incomeattributable to common stockholders for fiscal 2013 to range between $0.65 and$0.69 per diluted common share.The Company's guidance excludes the impact of investments that may be madeduring the remainder of 2013, which the Company expects to total between$150.0 million and $200.0 million for the full fiscal year,  a significantportion of which is expected to close in the latter part of the year andhaving a continued focus on senior housing and memory care facilities. Thesefuture investments in 2013 are expected to be funded first with available cashand then with borrowings available under the secured revolving creditfacility.Except as otherwise noted above, the foregoing projections reflectmanagement's view of current and future market conditions. There can be noassurance that the Company's actual results will not differ materially fromthe estimates set forth above. Except as otherwise required by law, theCompany assumes no, and hereby disclaims any, obligation to update any of theforegoing projections as a result of new information or new or futuredevelopments.The table below sets forth Sabra's updated 2013 full year guidance compared toits previously issued guidance:  Updated Guidance Previously Issued Guidance  Low High Low HighNet income attributable to common $0.65 $0.69 $1.03 $1.07stockholders         Add:        Depreciation and amortization 0.88 0.88 0.82 0.82         FFO 1.53 1.57 1.85 1.89Normalizing items 0.26 0.26 — —Normalized FFO $1.79 $1.83 $1.85 $1.89         FFO $1.53 $1.57 $1.85 $1.89Acquisition pursuit costs 0.02 0.02 0.04 0.04Stock-based compensation expense 0.18 0.18 0.11 0.11Straight-line rental income (0.37) (0.37) (0.32) (0.32)adjustments Amortization of deferred financing 0.13 0.13 0.08 0.08costsAmortization of debt premiums (0.06) (0.06) (0.02) (0.02)Non-cash interest income (0.01) (0.01) — —adjustments         AFFO 1.42 1.46 1.74 1.78Normalizing items 0.24 0.24 — —Normalized AFFO $1.66 $1.70 $1.74 $1.78