Sabra Health Care REIT (Nasdaq: SBRA), a leading real estate investment trust with deep roots in skilled nursing and senior living, is making an assertive shift into the behavioral health sector. During its Q1 earnings call, CEO Mark Rick Matros emphasized that the REIT is prioritizing behavioral health—particularly addiction treatment—as part of its broader strategy to diversify revenue and strengthen long-term growth. This move signals a rising trend in addiction treatment real estate, as demand for behavioral health services reaches record highs. With America facing a growing addiction crisis and behavioral health needs mounting post-pandemic, the opportunity to repurpose underutilized healthcare real estate has never been more vital—or more lucrative.
Behavioral Health as a Growth Engine
Sabra is now identifying skilled nursing and senior housing properties that can be converted into inpatient addiction treatment centers. The company believes that these residential-style facilities, already designed to meet medical needs, offer a natural fit for behavioral health services. According to Talya Nevo-Hacohen, executive vice president and chief investment officer, “We have found that the residential format of skilled nursing and senior housing sets up well for inpatient behavioral health assets, specifically addiction treatment.”
This strategy places Sabra at the forefront of the evolving addiction treatment real estate market, where both healthcare demand and investor interest are accelerating.
Strong Earnings Drive Expansion
The REIT’s Q1 performance underscores its financial strength. With $163.1 million in revenue—beating both earnings per share and revenue guidance—Sabra has ample capital to expand its behavioral health holdings. The company’s behavioral health portfolio now includes 13 owned properties and two mortgage loans, representing an investment of approximately $730 million, with an average yield of 8.3%.
Sabra first entered the addiction treatment real estate sector in 2019 with the acquisition of two facilities from Landmark Recovery for $14.8 million. That initial step paved the way for a larger deal in 2023, when the company announced a $325 million mortgage loan to Recovery Centers of America (RCA), covering eight inpatient addiction treatment facilities.
This long-term commitment demonstrates that addiction treatment real estate is more than a diversification play—it’s a strategic bet on one of the most essential and underserved areas in healthcare.
Converting Properties to Meet Behavioral Health Needs
Sabra’s approach involves converting underutilized assets—particularly skilled nursing and senior living facilities—into modern addiction treatment centers. Currently, four properties are under letter of intent for such conversion, with one additional property acquired in 2021 also slated for transformation. These projects are expected to increase Sabra’s behavioral health investment by about $75 million.
This adaptive reuse of healthcare assets exemplifies a smart, scalable method to grow within the addiction treatment real estate space. Instead of building from the ground up, Sabra is reimagining existing infrastructure to serve urgent mental health and addiction recovery needs.
Building Strategic Partnerships with Operators
A key component of Sabra’s success in behavioral health lies in its relationships with capable, scalable operators. The company is highly selective in this area, seeking partners with strong clinical outcomes, operational sophistication, and a clear growth vision.
“We’re really cautious with new operators because there aren’t that many true operators out there,” said Nevo-Hacohen. “We spent six months with Landmark before we did our first deal, just getting to know them and understanding their model.”
This careful, relationship-driven approach is vital in the addiction treatment real estate sector, where regulatory complexity and clinical accountability are paramount. Sabra’s rigorous vetting ensures that its facilities are managed by experienced, data-driven teams committed to patient care and long-term success.
Why Addiction Treatment Real Estate Matters Now
The growth of addiction treatment real estate reflects broader shifts in public health and healthcare delivery. Addiction and mental illness are no longer seen as fringe issues—they are recognized as central challenges requiring real infrastructure solutions. Sabra’s pivot into this space not only aligns with growing demand but also provides mission-aligned returns in a category that offers both social impact and financial upside.
As more Americans seek help for addiction and behavioral health conditions, real estate investors like Sabra are in a unique position to expand access to care by converting and financing treatment-ready spaces.
A Long-Term Vision Backed by Financial Strength
Sabra’s investments in addiction treatment real estate are driven by more than quarterly earnings—they reflect a long-term vision of sustainable healthcare delivery. With deep due diligence, strategic partnerships, and well-positioned properties, the company is building a portfolio that is designed to meet rising needs for years to come.
This approach also helps reduce risk. By working with scalable operators and repurposing existing assets, Sabra is able to enter the behavioral health space with agility and confidence. These investments offer an 8.3% average yield and complement Sabra’s broader healthcare portfolio.
The Future of Addiction Treatment Real Estate
As behavioral health continues to gain visibility in both public policy and investment circles, addiction treatment real estate will likely become one of the most important subsectors of healthcare real estate. Sabra is positioning itself early, capitalizing on shifting societal attitudes, unmet care needs, and underutilized real estate assets.
This forward-looking strategy benefits not only investors but also the thousands of individuals in need of high-quality addiction treatment services. With thoughtfully converted facilities and reliable operator partnerships, Sabra is creating spaces where recovery can begin—and where healthcare innovation meets real estate excellence.
