SBRA Stock: Sabra Health Care REIT Dividend vs AFFO, the RCA Write-Off and Avamere (2026)

The $0.30 dividend against FFO, AFFO and their normalized versions

Sabra reports five per-share lines: net income, FFO (the Nareit definition), Normalized FFO, AFFO and Normalized AFFO. In the company's definition AFFO is FFO “excluding stock-based compensation expense, non-cash rental and related revenues, non-cash interest income, non-cash interest expense” and the provision for loan losses, among other items, and the “Normalized” versions are adjusted for items “the Company does not believe are indicative of its ongoing operating results.” The same release warns that FFO and AFFO “also do not consider the costs associated with capital expenditures related to the Company’s real estate assets.” The measure to use for the dividend question depends on whether you want to count the RCA write-off; we show all of them.

The build from the net loss to Normalized AFFO shows where the quarter went. In thousands of dollars, as the release prints them (sums of printed lines are marked our arithmetic; the AFFO build starts again from FFO):

Normalized AFFO was up 12.9% on Q2 2025 in dollars while the diluted share count for AFFO went from 241,996,970 to 256,733,670 (6.1%), so per-share growth was $0.38 to $0.40 (5.3%, our arithmetic). That gap is the cost of funding acquisitions with equity, taken up in the share-count section below.

Seven quarters, three years and the guidance

All per-share figures are diluted and as the company reports them; the percentages are our arithmetic on those rounded numbers, and the guidance row uses the midpoint of each range. The dividend has been $0.30 each quarter from the one declared February 3, 2025 through the one declared August 3, 2026, and $1.20 a year in 2023, 2024 and 2025 per the 10-K's statement of equity. Two things stand out. Q2 2025 FFO of $0.44 was above Normalized FFO of $0.37 because it included a $17.2 million gain on six terminated interest rate swaps that the company then normalized away; Q2 2026 is the mirror image, with FFO pushed down by the loan write-off.

Guidance has two stories. In 2025 the company narrowed a range of $1.48 to $1.51 (February) to $1.495 to $1.505 (November) and reported $1.49. In 2026 it started at $1.55 to $1.59, reiterated that on April 29, and on July 21 raised it to $1.59 to $1.61:

The July 21 range assumes low-single-digit Cash NOI growth for the triple-net portfolio at the midpoint, low-to-mid-teens same-store growth for managed senior housing, general and administrative expense of $61 million (including $13 million of stock-based compensation), cash interest expense of $104 million, 258 million shares for Normalized FFO and 259 million for Normalized AFFO, and “only investments, dispositions and capital markets activity completed as of July 21, 2026.” The company says the midpoints imply 7% growth for Normalized FFO and 8% for Normalized AFFO over 2025.

Cash: operating cash flow against dividends paid

AFFO is not cash flow, and the company says so. The statement of cash flows gives a second check:

Operating cash flow covered the dividend by a wider margin each year since 2023 and again in the first half of 2026. It is before capital spending: additions to real estate were $25.2 million in the half (against $13.6 million a year earlier), Sabra has about $75 million of committed capital expenditures on triple-net properties, and the managed senior housing portfolio spent $2.6 million of recurring and $7.8 million of nonrecurring capital in Q2 alone at Sabra's share. Dividends paid in the half were 76% of AFFO dollars ($151.3 million of $199.6 million, our arithmetic).

For holders who receive the dividend in a taxable account, the 10-K characterizes each year's $1.20 as follows:

The “non-dividend distribution” part is the return-of-capital piece; our page on REIT distributions and return of capital explains how it reduces cost basis. Your own 1099-DIV is the document that counts.

The RCA loan: $300 million lent, $200 million received

The 10-K's schedule of mortgage loans lists the RCA mortgage at $300.0 million, a 7.5% contractual rate, maturing in 2026, with interest paid monthly and principal due at maturity; the July business update says it “had been scheduled to mature on November 1, 2026.” On June 30, 2026 Sabra received $200.0 million “in full satisfaction” of the $300.0 million. The 10-Q explains the timing: “The agreement for repayment and the requisite confirmation of the borrower’s ability to secure financing and execute the reduced payoff of the mortgage loan were not obtained until June 2026,” which is why RCA was still 5.1% of Annualized Cash NOI at March 31 and the loss lands in Q2. Sabra's July update ties the exit to a fall in behavioral health from 13% to 9% of Annualized Cash NOI.

The chief executive's explanation in the business update was that “redirecting our efforts towards investing in our core segments, rather than extending the loan, made the most sense from a value creation perspective,” and that “including interest income earned since 2021, we have more than recouped our initial investment.” Both statements are the company's. What the filings add is the mechanics: the loss is excluded from AFFO and Normalized AFFO but not from FFO or net income, and the income stream that came with the loan is smaller by roughly $6 million a quarter at the starting point, offset in part by about $9 million a year of interest saved on the revolver (our arithmetic, a simple illustration and not company guidance). Pro forma for the exit and the other July items, the company put Net Debt to EBITDA at 4.8 times instead of 5.0 times at March 31 and behavioral health at 9% instead of 13% of Annualized Cash NOI.

Avamere: from $41 million of rent to $48 million, then $53 million

Avamere Family of Companies is Sabra's largest named relationship at 8.4% of Annualized Cash NOI at June 30, 2026 (7.7% at March 31 and December 31, 2025, 8.4% at June 30, 2025). The Q2 release says Sabra “exercised its option to reset the rent under its lease with the Avamere Family of Companies” to “a fixed amount tied to the portfolio’s historical performance,” which raised annualized fixed cash rent to $48 million from February 1, 2026, against $41 million of cash rent paid in 2025. On July 21 Sabra announced letters of intent to re-tenant all 26 Avamere properties.

The business update says the transition followed “outreach to Sabra earlier this year by founder, Rick Miller, who indicated a desire to exit the skilled nursing business.” Two cautions. First, letters of intent are not signed transfers, and EDGAR shows no Sabra 8-K after August 3, 2026, so no filing we read confirms a closing. Second, a higher rent on the same buildings tightens coverage. If the 1.75 times was measured against about $41 million of rent, EBITDARM would be about $72 million and $53 million of rent would be about 1.35 times if earnings did not change (our arithmetic, an illustration: the supplemental does not state the rent used, and EBITDARM is before management fees, so coverage after fees is lower).

Concentration: no 10% tenant, and a portfolio that is shifting toward managed senior housing

For the three and six months ended June 30, 2026, and for 2025, the filings say “no tenant relationship represented 10% or more” of total revenues. The supplemental shows how the mix has moved, using Annualized Cash NOI, which includes the real estate and the loans and other investments:

Skilled nursing was 35.6% of revenues in 2025 and 31.9% in the first half of 2026 (revenues derived “directly or indirectly” from those facilities). At June 30, 2026 the consolidated portfolio was 364 properties and 37,043 beds and units: 207 skilled nursing/transitional care, 32 leased senior housing, 94 managed senior housing, 16 behavioral health and 15 specialty hospitals and other. Texas had 57 properties (15.7%), Kentucky and California 28 each (7.7%), Indiana 25 (6.9%) and Oregon 19 (5.2%); by gross investment Texas was 12.8%, California 11.1% and Indiana 8.4%. Sabra's investments include 395 items across 61 relationships in 40 U.S. states and Canada.

The triple-net leases expire on a schedule that puts 27.3% of annualized revenue in 2031 and 16.0% in 2029:

The 10-Q puts the weighted average remaining term of the 270 triple-net leases at seven years, and Sabra holds about $68 million of letters of credit and $11.7 million of cash security deposits from tenants.

Rent coverage: what the operators' own numbers show

Sabra's measure is EBITDARM coverage: the operator's earnings before interest, taxes, depreciation, amortization, rent and management fees divided by cash rent, for stabilized facilities, for the twelve months ending one quarter before the report date. The company states that it relies on tenant-supplied data that it has “not independently verified.” Coverage before management fees is higher than coverage after them, and the supplemental does not show the after-fee figure.

Leased senior housing coverage fell from 1.58 times to 1.52 times; the chief executive said in the Q2 release that the triple-net senior housing drops in occupancy and coverage were “simply due to the conversion of a high-performing triple-net asset to the managed portfolio. Otherwise, it would have been flat.” Four of the ten named relationships are below 1.8 times: Signature Behavioral (1.53), Avamere (1.75), Healthmark (1.73) and Cadia (1.73). They are the ones to track.

Managed senior housing: higher growth, and the operating risk is Sabra's

In a managed property Sabra, not a tenant, receives the resident fees, pays the operating costs and pays a manager. In Q2 2026 resident fees and services were $128.8 million (54.6% of $235.9 million of revenues, our arithmetic; 41.8% a year earlier) against $88.6 million of managed-portfolio operating expenses. The five-quarter record at Sabra's pro rata share:

Consolidated Cash NOI nearly doubled in a year (up 85.7%, our arithmetic), but most of that is acquisitions and conversions from triple-net: 18 managed communities were acquired after April 1, 2025 and five facilities were moved over. The same-store figure is the cleaner read: REVPOR up 6.5% (our arithmetic) and growth that has slowed from 17.1% in Q2 2025 to 13.7%. Year-over-year growth was 17.9% in Q4 2024 and 16.9% in Q1 2025. The managers are Sienna Senior Living (21 properties), Inspirit Senior Living (19), Traditions Management (14), Discovery Senior Living (12), Health Dimensions Group (6) and others (38), 110 properties in total counting the 16 in unconsolidated joint ventures. The Q2 release says the investment pipeline “consists almost entirely of senior housing opportunities,” and the managed senior housing bought in Q2 carried an expected initial cash yield of 7.27%, against 9.35% on skilled nursing purchases.

The loans and preferred equity that remain

Loans and other investments went from $434.1 million to $115.1 million in six months: the RCA mortgage, a $16.6 million loan on which Sabra exercised an option to acquire a skilled nursing facility, and smaller repayments. Two loans with zero book value are on nonaccrual (three at December 31, 2025), and Sabra has committed up to $7.9 million of further funding on one preferred equity investment and three loans. The loan book is now 2% of total assets (our arithmetic: 115.1 / 5,512.6), a far smaller credit risk than a year ago.

Debt: $2.65 billion, 4.01%, and a January 2027 revolver

Total debt principal is $2,645.9 million, 98.4% unsecured, at a 4.01% weighted effective rate and a 3.6-year weighted maturity. Variable-rate debt is 51.1% before hedges, but $930.0 million of SOFR borrowings are swapped to a weighted 3.20% and CAD 150.0 million of CORRA borrowings to 2.59%, leaving 12.0% of debt (the revolver) unhedged. 2027 through 2029 is 49.5% of principal (our arithmetic). Sabra's investor presentation says the weighted average maturity is “approximately 4 years with no material debt maturities until 2028”; the footnote to the slide notes the revolver's two six-month extension options, and the maturity schedule above counts the revolver in 2027. In July 2025 Sabra borrowed a $500.0 million five-year term loan and used the proceeds to redeem the 2026 Notes at 100.575% of principal.

The chief executive said that exiting the RCA loan “reduces our behavioral health concentration as well as our leverage.” The thing to watch is whether leverage holds near 4.6 times after the $223.0 million of managed senior housing bought in July and the $100 million awarded pipeline, which the company expects to fund with available liquidity, including proceeds from outstanding forward sales agreements.

Share count: what the equity funding has done

At the two dated prices in the company's own documents, the $1.20 annual dividend is a 6.2% yield on $19.51 and a 5.6% yield on $21.32 (our arithmetic; these are not current quotes). The forward agreements are the part that does not show in the share count yet: when settled, 21.4 million new shares, at prices set months earlier, are added, and the guidance already assumes 259 million Normalized AFFO shares, up from 256.7 million in Q2. The company's stated approach is to match fund investments with available liquidity, recycled capital and ATM proceeds; $599.0 million of investments closed in 2026 through August 3 at an estimated 7.5% initial cash yield.

Medicare, staffing and the payor mix

Skilled nursing/transitional care is still 47.7% of Annualized Cash NOI. The 10-Q records two Medicare items: CMS finalized a 2.4% net increase in skilled nursing payment rates for fiscal 2027 on July 29, 2026 (effective October 1, 2026), after 3.2% for fiscal 2026, and the federal minimum nurse staffing standards were repealed effective February 2, 2026. The tenant payor mix, one quarter in arrears, was 52.4% private pay and 47.6% non-private at June 30, 2026, against 46.1% and 53.9% a year earlier.

What changed in the latest quarter, and what comes next

• The RCA payoff. $200.0 million received against a $300.0 million mortgage; $100.0 million written off; behavioral health 8.6% of Annualized Cash NOI.
• Avamere. A fixed $48 million rent from February 1, 2026 and letters of intent for $53 million, with a second-half 2026 transition target.
• Guidance. Normalized AFFO range raised on July 21 to $1.59 to $1.61 and reiterated on August 3.
• Acquisitions. $274.1 million committed in Q2 at an 8.1% average initial cash yield, $223.0 million of managed senior housing closed after quarter end, $599.0 million year to date at 7.5%.
• Leverage. Net Debt to Adjusted EBITDA 4.61 times, from 5.04 times at March 31.
• What is not filed. The 10-Q and earnings release for the quarter ended September 30, 2026. EDGAR's list for Sabra shows nothing after the August 3 filings except a Form 144 dated September 8, 2026. Last year the Q3 earnings 8-K and the 10-Q were both filed on November 5, 2025; the Q2 2026 pair was filed together on August 3 and the Q1 2026 pair on April 29, so the Q3 2026 documents should land in late October to early November 2026. We have found no announced date.

What a holder can do with this

This page is analysis of public documents, not investment, legal or tax advice. Things the filings let you check yourself:

• Pick the denominator and say which. The $0.30 is 77% of AFFO and 75% of Normalized AFFO for Q2 2026, but 171% of FFO for the first half. Company-reported FFO is depressed by one write-off; Normalized AFFO excludes items the company chooses to call non-recurring, and in 2025 the reported $1.49 was, on the printed figures, just under the final $1.495 to $1.505 range.
• Read the loan write-off as a capital event, not an earnings event. $100.0 million is $0.39 a share, about 1.3 quarters of dividend. The ongoing cost is the lost interest, which the supplementals let you estimate.
• Track the relationships above 6% of NOI. Avamere (8.4%), Ensign (7.5%), Signature Healthcare (7.2%) and Signature Behavioral (6.1%), together with the 32.8% in managed senior housing where Sabra carries the operating risk.
• Follow coverage, not just rent. Signature Behavioral at 1.53 times, Avamere at 1.75 times and the new $53 million of Avamere rent are the checks on triple-net income.
• Watch the dated items. The Q3 2026 10-Q (not filed as of October 18, 2026), the revolver on January 4, 2027, the $100 million of 5.38% notes on May 17, 2027, and the settlement of 21.4 million forward shares.
• Know what kind of income it is. 18.7% of the 2025 dividend was a non-dividend distribution (return of capital); see our pages on return of capital and Section 199A dividends.
• Compare with the other healthcare names we read. Omega Healthcare reports AFFO and FAD with 22 cash-basis operators; Welltower is the senior housing comparison; American Healthcare REIT is the former non-traded REIT that listed. A listed share trades daily at a moving price, while a non-traded REIT repurchases under rules its board controls (listed vs non-traded); our page on what happened to a non-traded healthcare REIT shows how that can end.

FAQ

Sources, read on October 18, 2026: Sabra Health Care REIT, Inc. (SEC CIK 1492298) Form 10-K for 2025 (accession 0001492298-26-000008, filed February 12, 2026); Forms 10-Q for the quarters ended March 31, 2026 (0001492298-26-000012, filed April 29, 2026) and June 30, 2026 (0001492298-26-000028, filed August 3, 2026) and September 30, 2025 (0001492298-25-000039, filed November 5, 2025); earnings releases (Exhibit 99.1) and supplemental information (Exhibit 99.2) filed on Forms 8-K of February 19, 2025 (0001492298-25-000007), May 5, 2025 (0001492298-25-000015), August 4, 2025 (0001492298-25-000030), November 5, 2025 (0001492298-25-000038), February 12, 2026 (0001492298-26-000007), April 29, 2026 (0001492298-26-000011) and August 3, 2026 (0001492298-26-000027, with the Exhibit 99.4 investor presentation); the Form 8-K of July 21, 2026 with the business update (0001492298-26-000023); and the EDGAR filing list for the CIK. Payout percentages, sub-totals, growth rates, the per-share write-off, the interest illustrations, the share of debt due by year, resident fees as a share of revenue, the Avamere coverage illustration, the dated-price yields and the loan book as a share of assets are our arithmetic. Coverage, occupancy and payor data come from tenants and are not verified by Sabra. This is analysis of public documents, not investment, legal or tax advice.