| | | Re: Sabra REIT (SBRA) current yield 6.46%
10% Sale 9/13/2024 at $18.59/share. Will be closing out this position by scaling out every 5% higher as I find a replacement investment focusing on (1) a lower Price/FCF at/below 10x; (2) div yield 5%-6% or higher
It's always difficult to know when to sell a position and move on.
How do you know when to scale out and/or close an investment?
Has SBRA reached fair value to it's peers? (Maybe looking at div yield)
Are there any other metrics that shows this? (Yes, Price/FCF)
Reversion to SBRA's mean price/FCF (10 year avg about 14x)
As of September 30, 2023, Sabra’s investment portfolio included 377 real estate properties held for investment (consisting of (i) 240 Skilled Nursing/Transitional Care facilities, (ii) 43 senior housing communities (“Senior Housing - Leased”), (iii) 61 senior housing communities operated by third-party property managers pursuant to property management agreements (“Senior Housing - Managed”), (iv) 18 Behavioral Health facilities and (v) 15 Specialty Hospitals and Other facilities), 12 investments in loans receivable (consisting of two mortgage loans and 10 other loans), five preferred equity investments and two investments in unconsolidated joint ventures. As of September 30, 2023, Sabra’s real estate properties held for investment included 37,606 beds/units, spread across the United States and Canada. SBRA hit a low of $10.45/share in March/April 2023 after it took a huge hit from COVID in March/April 2020. Cash flows seemed to stabilized and Price/FCF at the time was around 8.69x at the time of my Buys.
I started building a position in March-May 2023 with 10 different buys at an average cost of $10.88/share.
(Summary provided by perplexity.ai )
- Summary of Results
- Capital Gain per Share: $7.72
- Total Dividends Collected: $1.20 per share (for 6 quarters)
- Total Return: $8.92 per share
- Total Investment: $10.88 per share
- ROI: 81.94%
- Annualized ROI: 58.07%
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Summary of Findings
- Sabra Health Care REIT (SBRA) has outperformed its peers with a 33.0% increase in stock price over the past year, compared to 25.0% for Welltower, 20.0% for Ventas, and 22.0% for Healthpeak.
- In terms of dividend yield, SBRA offers a competitive 6.54%, which is higher than Welltower's 5.5% and Healthpeak's 5.7%, but slightly lower than Ventas' 6.0%.
- The price-to-cash flow ratio for SBRA stands at 14.75, which is lower than Welltower’s 39.98, Ventas Inc at 19.90, Healthpeak Properties Inc (DOC) 12.8, indicating a relatively better valuation in terms of cash flow compared to its peers.
This data illustrates that while SBRA has shown strong price appreciation and offers an attractive dividend yield, it maintains a lower price-to-cash flow ratio compared to some of its competitors, suggesting it may be a more favorable investment option based on cash flow metrics.
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The top three companies that compare to Sabra Health Care REIT (SBRA) in the healthcare REIT sector are:
1. Welltower Inc. (WELL)
- Overview: Welltower is one of the largest healthcare REITs, focusing on senior housing and post-acute care properties. It has a diversified portfolio that includes skilled nursing, assisted living, and independent living facilities.
- Market Cap: Approximately $37 billion.
- Dividend Yield: Around 5.5%.
2. Ventas, Inc. (VTR)- Overview: Ventas is a leading healthcare REIT that invests in a broad range of healthcare properties, including senior living communities and medical office buildings. They focus on innovative care models and partnerships with leading operators.
- Market Cap: Approximately $25 billion.
- Dividend Yield: Approximately 6.0%.
3. Healthpeak Properties Inc (DOC) - Overview: Healthpeak focuses on life science properties, senior housing, and medical offices. The company has been shifting its focus towards life sciences, which have shown strong demand and growth potential.
- Market Cap: Approximately $14 billion.
- Dividend Yield: Roughly 5.7%.
Summary of Year-Over-Year Gains and Dividend Yield for 2023- SBRA:
- 1-Year Gain: 33.0%
- Dividend Yield: 6.54%
- WELL:
- 1-Year Gain: 25.0%
- Dividend Yield: 5.5%
- VTR:
- 1-Year Gain: 20.0%
- Dividend Yield: 6.0%
- DOC:
- 1-Year Gain: 22.0%
- Dividend Yield: 5.7%
These companies represent significant players in the healthcare REIT sector, each with unique investment strategies and property focuses that make them comparable to Sabra Health Care REIT.
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Conclusion:
SBRA has a current Price/FCF = 14.75x and is below it's peers except for DOC at 12.8x . Therefore on a comparison basis, probably worth holding. As it approaches $25/share div yield would be well below it's peers at 4.8% and Price/FCF would be 20x well above it's 10 year average.
FWIW I own DOC, SBRA & HR |
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