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

Certain subsidiaries of Sabra Health Care REIT, Inc. ("Sabra," the "Company" or "we")

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 of the net proceeds of the offering to redeem $113.8 million of the 8.125% senior notes due 2018 (the "2018 Notes") of certain of its subsidiaries. The 2018 Notes permit us to redeem up to 35% of the outstanding 2018 Notes with an amount equal to the net cash proceeds of certain equity offerings, including the 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 redemption for $113.8 million of the 2018 Notes, providing for a redemption price of 108.125% of the principal amount being redeemed, plus accrued and unpaid interest thereon to the date of redemption. Sabra expects to use the remainder of the net proceeds from the offering of the 2023 Notes of approximately $71.6 million to fund future possible acquisitions and for general corporate purposes.   The issuance of the 2023 Notes and the redemption of a portion of the 2018 Notes will result in net additional cash expenditures for interest and the redemption premium of $0.8 million when compared to waiting to call the same amount of the 2018 Notes at the first call date of November 1, 2014 at 104.063%.  These transactions are expected to result in AFFO dilution of $0.01 in fiscal 2013, excluding the one-time redemption premium payment of $9.2 million and assuming the excess cash is invested by the end of the third quarter of 2013, and are expected to be $0.03 accretive in 2014 assuming the excess funds are invested prior to the beginning of 2014. After adjusting for the 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 2018 Notes, 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 date of 24% of our total outstanding debt at March 31, 2013 extends from 2018 to 2023. The excess cash of $71.6 million increases our pro forma liquidity as of March 31, 2013 to $311.8 million.  When combined with the additional borrowing capacity of $36.0 million under Sabra's secured revolving credit facility and the potential for additional capital from the $100.0 million ATM program, the Company has access to capital of up to $447.8 million for future acquisition activities.   Sabra has updated its 2013 guidance to account for these transactions as well as actual activity through the first quarter as shown below.  Commenting on the transactions, Rick Matros, Chairman and CEO said, "Our approach to the capital markets has been and continues to be opportunistic as evidenced by the $100 million add-on to the 2018 Notes we completed last summer and the preferred equity offering we completed earlier this year.  We continue to focus on proactive steps to improve our credit rating with the principal goal of achieving investment grade status. That will take time.  Given the current robust capital market environment, we were able to successfully complete the issuance of the 2023 Notes at a rate that historically has been reserved for investment grade companies. The preferred equity offering created the opportunity to claw back 35% of the 2018 Notes making it possible to issue the 2023 Notes on a basis that will be accretive to 2014 AFFO, the first full year it is in place, after investing the excess proceeds. We expect interest rates will increase over time, so we have positioned ourselves to have enough liquidity to grow the Company to the point where we believe we can make a strong case for the ratings agencies to upgrade our ratings and thereby allow us to continue to improve our cost of capital despite the potential for an increasing interest rate environment. We remain confident regarding our ability to deploy our capital consistent with our investment goals. We will continue to target high quality senior housing and post-acute assets as well as look to expand our development projects." 2013 Outlook Update The Company has updated its 2013 guidance to take into account the issuance of the 2023 Notes, redemption of $113.8 million of the 2018 Notes and investments through March 31, 2013 of $17.5 million. In addition, the updated 2013 guidance no longer contemplates an issuance of $75.0 to $100.0 million of equity securities in 2013. For fiscal 2013 the Company expects FFO to range between $1.53 and $1.57 per diluted common share and Normalized FFO, after adjusting for the redemption premium, write-off of deferred financing costs and issuance premiums associated with the redemption of $113.8 million of the 2018 Notes, to range between $1.79 and $1.83 per diluted common share. The Company expects AFFO for fiscal 2013 to range between $1.42 and $1.46 per diluted common share and Normalized AFFO, after adjusting for the redemption premium, to range between $1.66 and $1.70 per diluted common share. The Company expects net income attributable 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 made during the remainder of 2013, which the Company expects to total between $150.0 million and $200.0 million for the full fiscal year,  a significant portion of which is expected to close in the latter part of the year and having a continued focus on senior housing and memory care facilities. These future investments in 2013 are expected to be funded first with available cash and then with borrowings available under the secured revolving credit facility. Except as otherwise noted above, the foregoing projections reflect management's view of current and future market conditions. There can be no assurance that the Company's actual results will not differ materially from the estimates set forth above. Except as otherwise required by law, the Company assumes no, and hereby disclaims any, obligation to update any of the foregoing projections as a result of new information or new or future developments. The table below sets forth Sabra's updated 2013 full year guidance compared to its previously issued guidance:   Updated Guidance Previously Issued Guidance   Low High Low High Net income attributable to common $0.65 $0.69 $1.03 $1.07 stockholders           Add:         Depreciation and amortization 0.88 0.88 0.82 0.82           FFO 1.53 1.57 1.85 1.89 Normalizing items 0.26 0.26 — — Normalized FFO $1.79 $1.83 $1.85 $1.89           FFO $1.53 $1.57 $1.85 $1.89 Acquisition pursuit costs 0.02 0.02 0.04 0.04 Stock-based compensation expense 0.18 0.18 0.11 0.11 Straight-line rental income (0.37) (0.37) (0.32) (0.32) adjustments  Amortization of deferred financing 0.13 0.13 0.08 0.08 costs Amortization 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 1.78 Normalizing items 0.24 0.24 — — Normalized AFFO $1.66 $1.70 $1.74 $1.78