How do the EBITDARM coverage ratios for Skilled Nursing/Transitional Care and Senior Housing compare to industry peers?
Answer
Sabra Health Care REIT, Inc. (Nasdaq: SBRA) disclosed the following EBITDARM (Earnings Before Interest, Taxes, Depreciation, Amortisation, and Rent, plus Maintenance) coverage ratios for its two primary property segments in the second quarter of 2025:
| Property segment | EBITDARM coverage (x) |
|---|---|
| Skilled Nursing / Transitional Care | 2.27 x |
| Senior Housing – Leased | 1.49 x |
What the ratios mean
- EBITDARM coverage measures how many times a property’s EBITDARM can cover its rent‑related obligations (including rent, interest, and maintenance).
- A higher multiple indicates a stronger ability to meet those obligations, which is generally viewed positively by lenders, investors, and rating agencies.
- A lower multiple suggests tighter cash‑flow margins and potentially higher sensitivity to rent‑or‑interest‑payment stress.
How Sabra’s ratios stack up against typical industry benchmarks
The press release does not provide any peer‑group data for direct comparison, so we cannot quote exact industry‑average multiples for the same quarter. However, we can place Sabra’s figures in the context of what is commonly observed among U.S. health‑care REITs and senior‑housing REITs:
| Segment | Typical EBITDARM coverage range for comparable REITs (historical market observations) | Sabra’s 2Q 25 result |
|---|---|---|
| Skilled Nursing / Transitional Care | 2.0 x – 3.0 x (most REITs target ≥ 2.0 x to comfortably service rent and debt) | 2.27 x – falls solidly within the “healthy” band, indicating a robust cash‑flow cushion. |
| Senior Housing – Leased | 1.3 x – 2.0 x (senior‑housing REITs often report lower coverage because of higher leverage and longer lease terms) | 1.49 x – sits in the mid‑range of the typical spectrum, suggesting adequate but not excess coverage. |
Key take‑away:
- Skilled Nursing / Transitional Care (2.27 x) is comfortably above the lower‑end of the industry norm and comparable to the stronger performers in that segment.
- Senior Housing – Leased (1.49 x) is in line with the average senior‑housing REIT, offering sufficient coverage but leaving less headroom than the skilled‑nursing segment.
Why the two segments differ
- Asset‑mix and lease structure – Skilled‑nursing facilities often have shorter, more “cash‑flow‑stable” leases with higher rent per square foot, while senior‑housing properties may carry longer, more variable lease terms and higher leverage, which compresses the coverage multiple.
- Operating cost profile – Maintenance and ancillary service costs are typically higher in senior‑housing, which can erode the EBITDARM margin relative to the rent‑obligation base.
- Capital‑intensity – Skilled‑nursing assets often require less capital‑intensive upgrades than senior‑housing communities, allowing a higher proportion of earnings to flow to cover rent.
How to benchmark Sabra more precisely
If you need a direct, data‑driven comparison to specific peers, you could:
- Identify a peer set of publicly‑traded health‑care REITs (e.g., Ventas, Inc. (VTR); HCP (HCP) – now part of **CorePoint; Medical Properties Trust (MPW); Welltower (WELL)) that disclose segment‑level EBITDARM coverage in their quarterly filings.
- Pull the most recent Q2 2025 or Q2 2024 figures from their 10‑Q reports or earnings releases.
- Calculate the average for each segment (Skilled Nursing/Transitional Care and Senior Housing) and compare directly to Sabra’s 2.27 x and 1.49 x.
- Consider rating‑agency metrics (e.g., Moody’s, S&P) that often publish “EBITDARM coverage” or “AFFO coverage” benchmarks for REITs in the health‑care and senior‑housing sectors.
Bottom line
- Skilled Nursing / Transitional Care: Sabra’s 2.27 x coverage is strong and aligns with the higher end of typical industry performance, indicating a solid ability to meet rent‑related obligations.
- Senior Housing – Leased: Sabra’s 1.49 x coverage is average‑ish for the sector, providing sufficient coverage but less buffer than the skilled‑nursing segment.
Until peer‑specific data is added, the best way to gauge Sabra’s relative standing is to compare its ratios to the historical industry ranges outlined above, which suggest that Sabra is well‑positioned in skilled‑nursing and competitively positioned in senior‑housing.