Sabra, Holiday Restructure from Lease to Management Agreement for 21-Property Portfolio

by Jeff Shaw

IRVINE, Calif., and WINTER PARK, Fla. — Irvine-based Sabra Health Care REIT Inc. (NASDAQ: SBRA) has canceled its master lease with Winter Park-based independent living operator Holiday Retirement, concurrently entering into management agreements between the two companies.

Holiday formerly operated the 21-community portfolio under a triple-net master lease. The new agreements will see Sabra instead pay Holiday a management fee, with a base fee set at 5 percent of revenues. After the first year of the agreement, there will be incentive fees as well, based on revenue growth at each community. The agreements will have one-year terms, with Sabra choosing to offer a one-year extension at the end of each term.

As part of the lease termination, Holiday will pay Sabra a $42.1 million termination fee and $15.1 million in retained security deposits. The termination fee may be partially paid in the form of Holiday handing some of its owned communities over to Sabra.

The deal is expected to close over the course of first-quarter 2019.

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