Sabra Health Care REIT is getting more skin in the game in the development world, having announced a new pipeline agreement with Leo Brown Group (LBG) to help finance up to 10 new senior housing construction projects. Under the agreement, LBG will identify and secure construction financing for senior housing projects. Of those potential projects, Sabra will then have the right, through March 31, 2017, to provide a portion of the required equity financing for up to 10 projects through a preferred equity structure. Plus, at the time of the investment, Sabra will then obtain a purchase option for the community. The total purchase price for the projects is estimated to be approximately $250 million, if Sabra decides to pursue its options. Once acquired, the communities will then be leased to LBG with the initial annual yield on cash rent expected to be 7.0% to 8.5% depending on the asset class. Already, Sabra owns one facility operated by LBG, and the company has provided the equity funding for two additional to-be-built communities, with purchase options on those two.
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