Irvine, California – Skilled nursing real estate deals are still happening, but Sabra Health Care REIT says the best opportunities are getting harder to find as private buyers crowd the market and chase the same assets.
On the company’s first-quarter earnings call, Sabra executives said appealing nursing home transactions remain limited, especially compared with the larger pipeline they see in senior housing. CEO Rick Matros said the company is still open to skilled nursing investments, but mostly when trusted operators bring off-market opportunities directly to Sabra.
That pressure is coming from buyers willing to make money from both the real estate and the operating business. As a result, traditional real estate buyers face a steeper climb when competing for quality skilled nursing assets.
The comments offer another sign that investor appetite for the sector remains strong even when transaction volume looks selective. That lines up with recent skilled nursing deal activity showing lenders and buyers still putting meaningful capital to work across the market.
Portfolio shift continues
Sabra is also continuing its gradual move toward private-pay senior housing. Matros said more than half of the company’s portfolio is now tied to private-pay assets for the first time. Even so, he made clear Sabra is not looking to dump strong skilled nursing properties just to change its mix faster.
Instead, the company appears to be taking a selective approach: hold onto nursing home assets that are performing well, sell where a market or operator situation no longer makes sense, and lean harder into senior housing where it sees more room to scale.
That doesn’t mean Sabra is down on skilled nursing. Executives said the company’s current nursing home portfolio continues to post record rent coverage, margin strength, and occupancy gains. Sabra reported first-quarter funds from operations of $0.37 per diluted share, topping analyst expectations by 2 cents.
The company also said its recent CommuniCare-related divestment was tied to a difficult state market rather than a broader retreat from skilled nursing.
Rates and referrals still matter
Sabra executives said reimbursement trends are settling back toward pre-pandemic norms. Matros said he was satisfied with the proposed 2.7% Medicare skilled nursing facility payment update for 2027 and suggested recent Medicaid and Medicare changes were largely in line with expectations.
He also pointed to value-based care as a longer-term opening for operators that are prepared to care for more complex patients at lower cost than hospitals or other settings. But he warned that not every operator will benefit equally. Facilities that stay passive, he said, could lose referral opportunities to competitors that are more aggressive about building those relationships.
For nursing home owners and operators, the message is pretty direct: capital still wants into the sector, but buyers are getting choosier, competition is intense, and the operators best positioned for referrals may end up with the upper hand on both care and growth.
