Sabra Health Care CEO Highlights Potential of Smaller Markets

Richard Matros, CEO of Sabra Health Care REIT, Inc. (NASDAQ: SBRA), joined REIT.com for a CEO Spotlight video interview at REITWorld 2015: NAREIT’s Annual Convention for All Things REIT at the Wynn Las Vegas.

Matros discussed Sabra’s strategy of concentrating on secondary and tertiary markets, rather than the major metropolitan statistical areas (MSAs). Much of Sabra’s development is concentrated on senior housing, an area where there have been concerns about overbuilding, according to Matros. However, Matros said Sabra’s focus on smaller markets has given it access to cheaper land and lower building costs.

Although Sabra will consider buying stabilized assets in larger markets, Matros emphasized that smaller markets present plenty of opportunities -- a scenario that he feels is unlikely to change.

Matros also highlighted Sabra’s strategy of increasing diversification. Five years ago, Sabra had one tenant; today, it has 34. At the same time, the company has shifted from 96 percent skilled nursing and government reimbursement to less than half, Matros pointed out.

“We continue to diversify, but we’re at a place right now where we feel relatively comfortable,” Matros said.

Meanwhile, Matros noted that with all the changes occurring in the skilled nursing sector, it is particularly important to buy operators that have learned to adapt their business models.

“We’ve been successful in bringing new operators on board that we think are a little ahead of the game,” Matros said.