Sabra Health Care REIT (Nasdaq: SBRA) is making a major move into behavioral health facility investment by allocating $800 million to expand its portfolio. Traditionally focused on skilled nursing and senior living facilities, Sabra is now targeting mental health and substance use treatment properties to capitalize on growing demand and projected sector growth.
Talya Nevo-Hacohen, Sabra’s executive vice president and chief investment officer, emphasized the company’s commitment: “We are committed to supporting the delivery of behavioral health services by creating and financing the places where they happen so that these critical services are accessible to all regardless of age, income or location.” This focus on behavioral health facility investment is designed to improve access to essential care while diversifying Sabra’s asset base.
Behavioral Health as a Growing Revenue Stream
Currently, behavioral health accounts for 13% of Sabra’s annualized cash net operating income. The company’s portfolio includes 14 properties and two mortgages totaling $730 million in behavioral health facility investment, boasting an average cash yield exceeding 8%. Sabra plans to invest an additional $27.6 million toward converting three leased facilities into behavioral health treatment centers, further solidifying its strategic shift.
Conversion Opportunities Unlocking Value
The company is particularly interested in conversion opportunities, transitioning some skilled nursing and senior living properties into behavioral health sites. This approach reflects Sabra’s asset recycling strategy to unlock value through behavioral health facility investment. Nevo-Hacohen shared, “We are now determining which properties are long-term hold and which are candidates for conversion, repositioning or sale.”
Focus on Substance Use Disorder Treatment Facilities
Sabra is accelerating its focus on substance use disorder treatment facilities, dedicating $47.5 million to convert several properties—including skilled nursing facilities and memory care campuses—into inpatient addiction treatment centers. These efforts follow Sabra’s earlier acquisition of The Irvine, a former senior housing facility converted into an opioid use disorder treatment center.
Strategic Partnerships Strengthen Investment
Partnerships play a key role in Sabra’s strategy. The company’s mortgage loan deal with Recovery Centers of America last year, securing eight inpatient addiction treatment facilities for $325 million, exemplifies how behavioral health facility investment can scale high-demand treatment infrastructure.
Looking Ahead
While Sabra faced a challenging quarter with revenue slightly below expectations, its robust commitment to behavioral health remains clear. “Our attention to this underserved factor is being noticed,” Nevo-Hacohen noted. “We are now in active discussions with more operators on additional conversion opportunities.” This ongoing momentum highlights the strategic importance of behavioral health facility investment in Sabra’s growth plans.
In summary, Sabra Health Care REIT’s targeted behavioral health real estate investment is reshaping its portfolio and supporting vital mental health and addiction treatment services. By converting existing assets and partnering with operators, Sabra aims to generate durable income streams while addressing an urgent healthcare need.
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